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Migration and trade with external economies of scale

The analysis of migration in Findlay (1982) is extended by adding external economies of scale to the Ricardian model as in Ethier (1982). With external economies, the larger country always gains from trade but the smaller country may lose from trade unless the external economies of scale are sufficiently strong. The smaller country will always gain from emigration but the larger country may lose from immigration unless the external economies of scale are sufficiently strong. Both countries gain from complete economic integration (free labour migration with free trade). Finally, the optimal migration policies of the two countries are derived.

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Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2007/23.

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Length: 34 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:cdf:wpaper:2007/23
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  1. Frank D. Graham, 1923. "Some Aspects of Protection Further Considered," The Quarterly Journal of Economics, Oxford University Press, vol. 37(2), pages 199-227.
  2. Grossman, Gene M., 1984. "The gains from international factor movements," Journal of International Economics, Elsevier, vol. 17(1-2), pages 73-83, August.
  3. Jagdish Bhagwati, 1958. "Immiserizing Growth: A Geometrical Note," Review of Economic Studies, Oxford University Press, vol. 25(3), pages 201-205.
  4. Richard B. Freeman, 2006. "People Flows in Globalization," NBER Working Papers 12315, National Bureau of Economic Research, Inc.
  5. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
  6. Donald R. Davis & David E. Weinstein, 2002. "Technological Superiority and the Losses from Migration," NBER Working Papers 8971, National Bureau of Economic Research, Inc.
  7. Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, vol. 50(5), pages 1243-68, September.
  8. Timothy J. Hatton, 2007. "Should we have a WTO for international migration?," Economic Policy, CEPR;CES;MSH, vol. 22, pages 339-383, 04.
  9. Findlay, Ronald, 1982. "International distributive justice : A trade theoretic approach," Journal of International Economics, Elsevier, vol. 13(1-2), pages 1-14, August.
  10. Panagariya, Arvind, 1981. "Variable Returns to Scale in Production and Patterns of Specialization," American Economic Review, American Economic Association, vol. 71(1), pages 221-30, March.
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