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Productivity differences and the dynamic effects of labor movements

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  • Klein, Paul
  • Ventura, Gustavo

Abstract

Barriers to labor mobility across countries coexist with substantial differences in living standards largely attributable to productivity differences. A growth model with endogenous labor movements is used to assess the effects on output, capital accumulation and welfare of removing barriers to labor mobility. The model is parameterized so that it is consistent with evidence on historical labor movements, and is applied to two cases: the enlargement of the European Union and the (hypothetical) creation of a common labor market in the North America. The main finding is that there are large resulting gains in terms of output and welfare.

Suggested Citation

  • Klein, Paul & Ventura, Gustavo, 2009. "Productivity differences and the dynamic effects of labor movements," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1059-1073, November.
  • Handle: RePEc:eee:moneco:v:56:y:2009:i:8:p:1059-1073
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    Cited by:

    1. Elizabeth Caucutt & Thomas Cooley & Nezih Guner, 2013. "The farm, the city, and the emergence of social security," Journal of Economic Growth, Springer, vol. 18(1), pages 1-32, March.
    2. Chakrabarti, Anindya S. & Sengupta, Aparna, 2017. "Productivity differences and inter-state migration in the U.S.: A multilateral gravity approach," Economic Modelling, Elsevier, vol. 61(C), pages 156-168.
    3. Pierre M. Picard & Tim Worrall, 2010. "Sustainable Migration Policies," CREA Discussion Paper Series 10-12, Center for Research in Economic Analysis, University of Luxembourg.
    4. Julian Giovanni & Andrei A. Levchenko & Francesc Ortega, 2015. "A Global View Of Cross-Border Migration," Journal of the European Economic Association, European Economic Association, vol. 13(1), pages 168-202, February.
    5. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    6. Jang-Ok Cho & Thomas Cooley & Hyung Seok Kim, 2015. "Business Cycle Uncertainty and Economic Welfare," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 185-200, April.
    7. Mandelman, Federico S. & Zlate, Andrei, 2012. "Immigration, remittances and business cycles," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 196-213.
    8. Thu Hien Dao & Frédéric Docquier & Mathilde Maurel & Pierre Schaus, 2018. "Global Migration in the 20th and 21st Centuries: the Unstoppable Force of Demography," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2018003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    9. Sanjay Jain & Sumon Majumdar & Sharun Mukand, 2008. "Workers Without Borders? Culture, Migration and the Political Limits to Globalization," Working Papers 1196, Queen's University, Department of Economics.
    10. Pfammatter, Andrea Corina, 2015. "Do differences in international labor mobility lead to differences in the fiscal multiplier? A theoretical approach," MPRA Paper 68955, University Library of Munich, Germany.
    11. Kleemans, Marieke, 2015. "Migration Choice under Risk and Liquidity Constraints," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 200702, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    12. repec:rsr:supplm:v:65:y:2017:i:5:p:41-50 is not listed on IDEAS
    13. Jan Ditzen, 2014. "Economic Growth and Migration," SEEC Discussion Papers 1406, Spatial Economics and Econometrics Centre, Heriot Watt University.
    14. Michał BURZYŃSKI, 2014. "Trading Goods or Human Capital The Winners and Losers of Economic Integration," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2014022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Wessel N. Vermeulen, 2011. "External income, De-industrialisation and Labour Mobility," CREA Discussion Paper Series 11-20, Center for Research in Economic Analysis, University of Luxembourg.
    16. John Kennan, 2014. "Freedom of movement for workers," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-86, September.
    17. Michal burzynski & Christoph Deuster & Frédéric Docquier, 2018. "The Geography of Talent: Development Implications and Long-Run Prospects," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2018002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    18. Susana Iranzo & Giovanni Peri, 2007. "Migration and Trade in a World of Technological Differences: Theory with an Application to Eastern-Western European Integration," NBER Working Papers 13631, National Bureau of Economic Research, Inc.
    19. Iranzo, Susana & Peri, Giovanni, 2009. "Migration and trade: Theory with an application to the Eastern-Western European integration," Journal of International Economics, Elsevier, vol. 79(1), pages 1-19, September.
    20. Pierre M. Picard & Tim Worrall, 2016. "Is a Policy of Free Movement of Workers Sustainable?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 718-754, October.
    21. John Kennan, 2013. "Open Borders," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 1-13, April.
    22. Bandiera, Oriana & Rasul, Imran & Viarengo, Martina, 2013. "The Making of Modern America: Migratory Flows in the Age of Mass Migration," Journal of Development Economics, Elsevier, vol. 102(C), pages 23-47.
    23. Hyun Lee, 2016. "Quantitative Impact of Reducing Barriers to Skilled Labor Immigration: The Case of the US H-1B Visa," Working papers 2016-35, University of Connecticut, Department of Economics.
    24. repec:rsr:supplm:v:65:y:2017:i:5:p:198-210 is not listed on IDEAS
    25. DELOGU Marco & DOCQUIER Frédéric & MACHADO Joël, 2017. "Globalizing labor and the world economy: the role of human capital," LISER Working Paper Series 2017-16, LISER.

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