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International Migration And Uncertainty:A Non-Factor Price Equalization Overlapping Generations Model

Listed author(s):
  • Damien Gaumont
  • Charbel Macdissi

This paper proposes a framework to analyze international migrations under uncertainty in theDiamond (1965) two period overlapping generations model with two countries. Considering arandom country-shock on both labor and capital, we show that each autarkic Cobb-Douglaseconomy converges to a unique expected steady-state equilibrium which is a function ofcountry-specific shocks and parameters. Opening the borders of the two countries insteady-state equilibrium allows for individual migrations. Since risk is country-specific,incentives for migration exist and there is no factor price equalization. Since individuals areheterogeneous with respect to their risk aversion, some migrate and some do not. Countries arealways populated. Both temporary and return migrations appear.

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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/143389/1/ARTICLEGAUMONTMACDISSI.pdf
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Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 55 (2012)
Issue (Month): 2 ()
Pages: 151-177

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Handle: RePEc:bxr:bxrceb:2013/143389
Contact details of provider: Web page: http://difusion.ulb.ac.be

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  1. Damien Gaumont & Alice Mesnard, 2001. "Inheritance, land, and capital mobility linked to labour mobility," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(4), pages 669-687.
  2. Jean-Pierre Vidal & Philippe Michel & Bertrand Crettez, 1996. "Time preference and labour migration in an OLG model with land and capital," Journal of Population Economics, Springer;European Society for Population Economics, vol. 9(4), pages 387-403.
  3. Jovanovic, Boyan & Nyarko, Yaw, 1995. "The transfer of human capital," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 1033-1064.
  4. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-148, March.
  5. Burda, Michael C, 1995. "Migration and the Option Value of Waiting," CEPR Discussion Papers 1229, C.E.P.R. Discussion Papers.
  6. Damien Gaumont & Alice Mesnard, 2000. "Altruism and international labour migration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(1), pages 113-126.
  7. El-Gamal, Mahmoud A., 1994. "A dynamic migration model with uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 18(3-4), pages 511-538.
  8. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
  9. Sunil Kanwar, 1998. "Are production risk and labour market risk covariant?," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(1), pages 129-146.
  10. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February.
  11. Jean-Pierre Vidal & Philippe Michel & Bertrand Crettez, 1998. "Time preference and capital mobility in an OLG model with land," Journal of Population Economics, Springer;European Society for Population Economics, vol. 11(1), pages 149-158.
  12. Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
  13. Berninghaus, Siegfried & Seifert-Vogt, Hans Gunther, 1993. "The role of the target saving motive in guest worker migration A theoretical study," Journal of Economic Dynamics and Control, Elsevier, vol. 17(1-2), pages 181-205.
  14. Daniel A. Traca, 2005. "Globalization, Wage Volatility, and the Welfare of Workers," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 237-249, May.
  15. Stephen Drinkwater & Paul Levine & Emanuela Lotti & Joseph Pearlman, 2003. "The Economic Impact of Migration: A Survey," School of Economics Discussion Papers 0103, School of Economics, University of Surrey.
  16. Levy, H & Markowtiz, H M, 1979. "Approximating Expected Utility by a Function of Mean and Variance," American Economic Review, American Economic Association, vol. 69(3), pages 308-317, June.
  17. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
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