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International Factor Mobility, Skills Formation and Welfare

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  • Chaudhuri, Sarbajit

Abstract

The paper examines the welfare consequences of an inflow of foreign capital and an emigration of skilled labour in a small open economy in terms of a four sector general equilibrium model in the presence of endogenous skill formation and imperfection in the market for unskilled labour. It finds that both foreign capital and emigration of skilled labour may be welfare-improving although the outcomes of these policies depend on the relative capital intensities of different sectors and the magnitude of imperfection in the market for unskilled labour. Measures like labour market reform and capital subsidy (or tax) to the appropriate sector may be resorted to improve national welfare and ensure higher skills formation.

Suggested Citation

  • Chaudhuri, Sarbajit, 2008. "International Factor Mobility, Skills Formation and Welfare," MPRA Paper 9302, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:9302
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    References listed on IDEAS

    as
    1. Chaudhuri, Sarbajit, 2007. "Foreign capital, welfare and urban unemployment in the presence of agricultural dualism," Japan and the World Economy, Elsevier, vol. 19(2), pages 149-165, March.
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    7. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2007. "Economic liberalization and wage inequality in the presence of labour market imperfection," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 592-603.
    8. Bhagwati, Jagdish & Rodriguez, Carlos, 1975. "Welfare-theoretical analyses of the brain drain," Journal of Development Economics, Elsevier, vol. 2(3), pages 195-221, September.
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    14. Marjit, Sugata & Kar, Saibal, 2005. "Emigration and wage inequality," Economics Letters, Elsevier, vol. 88(1), pages 141-145, July.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Foreign capital; Skills formation; Labour market imperfection; National welfare; Labour market reform;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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