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The Welfare Impact of Global Migration in the OECD Countries

Author

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  • 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)

Abstract

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.

Suggested Citation

  • Amandine AUBRY & Michal BURZYŃSKI, 2013. "The Welfare Impact of Global Migration in the OECD Countries," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 07 Jan 2015.
  • Handle: RePEc:ctl:louvir:2013035
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    References listed on IDEAS

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    Cited by:

    1. Costanza Biavaschi & Michal Burzynski & Benjamin Elsner & Joël Machado, 2016. "The Gain from the Drain - Skill-biased Migration and Global Welfare," CReAM Discussion Paper Series 1624, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    2. Michal Burzynski, 2016. "Time, Space and Skills in Designing Migration Policy," CREA Discussion Paper Series 16-12, Center for Research in Economic Analysis, University of Luxembourg.
    3. Michał BURZYŃSKI, 2014. "Trading Goods or Human Capital The Winners and Losers of Economic Integration," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2014022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

    More about this item

    Keywords

    migration; market size; inequalities; general equilibrium; brain drain;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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