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Efficiency gains from liberalizing labor mobility

  • Frédéric DOCQUIER

    ()

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS)

  • Joël MACHADO

    ()

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Khalid SEKKAT

    ()

    (Economic Research Forum and Université Libre de Bruxelles)

This paper quantifies the effect of a complete liberalization of international migration on the world GDP and its distribution across regions. We build a general equilibrium model endogenizing bilateral migration and wage disparities between and within countries. A dual strategy is developed to identify total migration costs and their legal component. Contrary to existing studies, we obtain limited efficiency gains. Accounting for incompressible moving costs strongly reduces the benefits from liberalization. When we account for endogenous productivity, congestion, heterogeneous education quality, imperfect substitution between migrants and natives, and network effects, efficiency gains reach about 4 percent of the world GDP.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2012023.

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Length: 42
Date of creation: 30 Oct 2012
Date of revision:
Handle: RePEc:ctl:louvir:2012023
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