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FDI, Infrastructure and the Welfare Effects of Labour Migration

  • Barry, Frank
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    A model of a small open economy with open capital and labour markets is presented. Labour demand is based on capital mobility and increasing returns in production. Migration decisions are based on the relative attractiveness of regions in terms of the stock of infrastructure, including its tax cost and the degree of congestion, and the level of wages prevailing. Equilibria are not Pareto-efficient because individuals do not take account of the impact of their actions on the level of wages prevailing, the extent of the tax base to finance infrastructural provision, or the degree of congestion. The model generates new insights into a range of policy issues that surfaced over the course of the recent Irish boom.

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    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3380
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    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3380.

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    Date of creation: May 2002
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    Handle: RePEc:cpr:ceprdp:3380
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    8. Panicos O. Demetriades & Spiros Bougheas, 1995. "Infrastructure, Specialisation and Economic Growth," Keele Department of Economics Discussion Papers (1995-2001) 95/15, Department of Economics, Keele University.
    9. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November.
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