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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. 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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  13. Jess Benhabib & Boyan Jovanovic, 2007. "Optimal Migration: A World Perspective," NBER Working Papers 12871, National Bureau of Economic Research, Inc.
  14. Artuc, Erhan & Docquier, Frédéric & Özden, Çaglar & Parsons, Christopher, 2015. "A Global Assessment of Human Capital Mobility: The Role of Non-OECD Destinations," World Development, Elsevier, vol. 65(C), pages 6-26.
  15. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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  17. 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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