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The Welfare Impact of Global Migration in the OECD Countries

  • Amandine AUBRY

    ()

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

  • Michal BURZYŃSKI

    ()

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

In this paper we investigate the impact of global migration on the welfare of native workers in the OECD countries. We develop a multi-country, general equilibrium model with trade and migration. Labor is assumed to be heterogeneous, whereas the wages, prices, trade flows, the mass of varieties of goods and the TFP levels are endogenized. The issue of the redistribution is also examined. The main result of this paper is the quantification of the welfare effects of migration for different groups of workers. These outcomes depend substantially on the size and the structure of migration in the OECD countries, and vary with educational levels of migrants. We consider the overall effect as a sum of three channels: the market size, wage and TFP effects. The key finding is that the market size effect plays a vital role in determining the benefits and costs of migration. Its consequences are prone to spillovers due to the international trade. Analyzing the shocks on the stock and the 1990-2000 flow of migrants, we discuss different patterns of the macroeconomic and welfare impacts of non-OECD (South-North) and OECD (North-North) migration. Nearly all the OECD countries benefit from the South-North migration. On the contrary, there are only few economies which are gaining from the North-North migration. Finally, we confirm a common belief that migration increases inequality between poor and wealthy citizens of the OECD countries, although this effect is mainly due to the intra-OECD emigration.

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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 2013035.

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Length: 39
Date of creation: 24 Dec 2013
Date of revision: 07 Jan 2015
Handle: RePEc:ctl:louvir:2013035
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  1. Giovanni Peri & Kevin Shih & Chad Sparber, 2013. "STEMWorkers, H1B Visas and Productivity in US Cities," Norface Discussion Paper Series 2013009, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Spence, Michael, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Wiley Blackwell, vol. 43(2), pages 217-35, June.
  3. Frederic Docquier & Hillel Rapoport, 2011. "Globalization, brain drain and development," CReAM Discussion Paper Series 1108, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  4. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
  5. Grossman, G.M. & Helpman, E., 1988. "Product Development And International Trade," Papers 132, Princeton, Woodrow Wilson School - Public and International Affairs.
  6. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
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  8. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc.
  9. Frédéric DOCQUIER & Çağlar ÖZDEN & Christopher PARSONS & Ehran ARTUC, 2012. "A Global Assessment of Human Capital Mobility: the Role of non-OECD Destinations," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  10. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2007. "Estimating Trade Flows: Trading Partners and Trading Volumes," NBER Working Papers 12927, National Bureau of Economic Research, Inc.
  11. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  12. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  13. Caglar Ozden & Christopher R. Parsons & Maurice Schiff & Terrie L. Walmsley, 2011. "Where on Earth is Everybody? The Evolution of Global Bilateral Migration 1960-2000," World Bank Economic Review, World Bank Group, vol. 25(1), pages 12-56, May.
  14. Jess Benhabib & Boyan Jovanovic, 2007. "Optimal Migration: A World Perspective," NBER Working Papers 12871, National Bureau of Economic Research, Inc.
  15. Susana Iranzo & Giovanni Peri, 2009. "Migration and Trade: Theory with an Application to the Eastern-Western European Integration," Working Papers 97, University of California, Davis, Department of Economics.
  16. Alfonso Irarrazabal & Andreas Moxnes & Luca David Opromolla, 2013. "The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs," NBER Working Papers 19236, National Bureau of Economic Research, Inc.
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