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The dynamic implications of liberalizing global migration

  • Marco DELOGU

    ()

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and University of Luxemburg)

  • Frédéric DOCQUIER

    ()

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS, National Fund for Scientific Research)

  • Joël MACHADO

    ()

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

This paper quantitatively investigates the short- and long-run effects of liberalizing global migration on the world distribution of income. We develop and parametrize a dynamic model of the world economy with endogenous migration, fertility and education decisions. We identify bilateral migration costs and their legal component for each pair of countries and two classes of worker. Our analysis reveals that the effects of a liberalization on human capital accumulation, income and inequality are gradual and cumulative. In case of a complete liberalization, the world average level of GDP per worker increases by 20 percent in the short-run, and by more than 55 percent after 50 years. The world average index of inequality decreases and the liberalization path has stochastic dominance over the Baseline-As-Usual. These results are very robust to our identifying assumptions. We also analyze partial liberalization shocks: effi ciency and inequality e¤ects are roughly proportional to the "liberalization rate".

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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 2013029.

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Length: 39
Date of creation: 15 Nov 2013
Date of revision:
Handle: RePEc:ctl:louvir:2013029
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