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Labor Mobility, Trade, and Social Capital


  • Maurice Schiff


Labor market integration raises welfare in the absence of distortions. This paper examines labor and goods market integration in a general-equilibrium model with social capital. The findings are: (i) labor market integration has an ambiguous impact on welfare, and raises it if the goods and labor skills are sufficiently different; (ii) compared to Pareto optimum, labor mobility (social capital) is excessively large (depleted); (iii) trade is superior to labor market integration if trading costs are no higher than private migration costs, otherwise the outcome is ambiguous; and (iv) the creation of new institutions in response to labor market integration has an ambiguous impact on welfare. Copyright Blackwell Publishing Ltd 2004.

Suggested Citation

  • Maurice Schiff, 2004. "Labor Mobility, Trade, and Social Capital," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 630-642, September.
  • Handle: RePEc:bla:reviec:v:12:y:2004:i:4:p:630-642

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    References listed on IDEAS

    1. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
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    5. Schiff, Maurice, 1999. "Labor market integration in the presence of social capital," Policy Research Working Paper Series 2222, The World Bank.
    6. David E. Wildasin, 2000. "Labor-Market Integration, Investment in Risky Human Capital, and Fiscal Competition," American Economic Review, American Economic Association, vol. 90(1), pages 73-95, March.
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    11. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
    12. Paul Cashin & Ratna Sahay, 1996. "Internal Migration, Center-State Grants, and Economic Growth in the States of India," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 123-171, March.
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    Cited by:

    1. Marina Della Giusta & Uma Kambhampati, 2006. "Women migrant workers in the UK: social capital, well-being and integration," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(6), pages 819-833.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification


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