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Reconciling the Pattern of Trade with the Pattern of Migration

  • Rauch, James E

If only skilled (educated) individuals can become managers, then to employ fully its work force, given a distribution of managerial talent, a country in which skilled labor is scarce must use a less talented manager at the margin than a country in which skilled labor is abundant. Wages for unskilled workers and skilled individuals who choose to become employees are then lower in the former country, while incomes of skilled individuals talented enough to become managers are lower (for a given talent level) in the latter. Countries with abundant skilled labor therefore export managers (e.g., through multinational subsidiaries) and skilled-labor-intensive goods yet import skilled employees (the "brain drain"). Copyright 1991 by American Economic Association.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 81 (1991)
Issue (Month): 4 (September)
Pages: 775-96

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Handle: RePEc:aea:aecrev:v:81:y:1991:i:4:p:775-96
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  1. Bowen, Harry P, 1983. "Changes in the International Distribution of Resources and Their Impact on U.S. Comparative Advantage," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 402-14, August.
  2. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-66, April.
  3. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-53, September.
  4. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier.
  5. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  6. Calvo, Guillermo A & Wellisz, Stanislaw, 1980. "Technology, Entrepreneurs, and Firm Size," The Quarterly Journal of Economics, MIT Press, vol. 95(4), pages 663-77, December.
  7. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-78, December.
  8. Balassa, Bela, 1979. "The Changing Pattern of Comparative Advantage in Manufactured Goods," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 259-66, May.
  9. Greenwood, Michael J & McDowell, John M, 1986. "The Factor Market Consequences of U.S. Immigration," Journal of Economic Literature, American Economic Association, vol. 24(4), pages 1738-72, December.
  10. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-29, September.
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