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Labor Supply, Migration, and Long-Term Development

  • Lucas Bretschger


This article analyzes the impact of the supply of skilled and unskilled labor on the growth rate of open economies. Using an expansion-in-varieties framework, the model distinguishes between a long-term equilibrium and a medium-term adjustment path. It is demonstrated that the dynamic effects of labor supply are different in a model with expanding varieties in the consumption sector from those in a model with expanding varieties in the production sector. In addition, the outcome depends on the elasticities of substitution in production as well as the countries' production shares in world goods markets. It is shown that, in general, the supply of unskilled labor is likely to have an unfavorable effect on long-term development. Copyright Kluwer Academic Publishers 2001

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Article provided by Springer in its journal Open Economies Review.

Volume (Year): 12 (2001)
Issue (Month): 1 (January)
Pages: 5-27

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Handle: RePEc:kap:openec:v:12:y:2001:i:1:p:5-27
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  1. Feenstra, Robert C., 1996. "Trade and uneven growth," Journal of Development Economics, Elsevier, vol. 49(1), pages 229-256, April.
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  5. Dolado, Juan J. & Goria, Alessandra & Ichino, Andrea, 1993. "Immigration, Human Capital and Growth in the Host Country: Evidence from Pooled Country Data," CEPR Discussion Papers 875, C.E.P.R. Discussion Papers.
  6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  7. De Long, J Bradford & Summers, Lawrence H, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 445-502, May.
  8. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  9. Robert J. Barro & Jong-Wha Lee, 1993. "International Comparisons of Educational Attainment," NBER Working Papers 4349, National Bureau of Economic Research, Inc.
  10. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
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  12. Faini, Riccardo, 1996. "Increasing returns, migrations and convergence," Journal of Development Economics, Elsevier, vol. 49(1), pages 121-136, April.
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