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The Global Economic Implications of Freer Skilled Migration

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  • Rod Tyers

    (Business School, University of Western Australia and Research School of Economics, Australian National University)

  • Iain Bain

    (KPMG Sydney)

Abstract

Trade and technology driven increases in skill premia in the older industrial regions since the 1980s have raised the spectre of “skill shortages”, one consequence of which has been freer migration of skilled and professional workers from developing regions. The links between demographic change, migration flows and economic growth are here explored using a demographic sub-model that is integrated within an otherwise standard model of the global economy in which regional households are disaggregated by age and gender. New matrices of global migration flows are developed and disaggregated by skill level to support this modelling. Skilled migration flows are assumed to be motivated by real wage differences to an extent that is variably constrained by immigration policies. A uniform relaxation of these constraints is shown to have most effect on labour markets in the traditional migrant destinations, Australia, Western Europe and North America, where it restrains the skill premium and substantially enhances GDP growth. Skill premia are raised and GDP growth slowed, however, in regions of origin, and particularly in South Asia, where the wage gap with the West is particularly high. On average, therefore, global wage inequality is exacerbated by expanded skilled migration.

Suggested Citation

  • Rod Tyers & Iain Bain, 2015. "The Global Economic Implications of Freer Skilled Migration," Economics Discussion / Working Papers 15-12, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:15-12
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    References listed on IDEAS

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    Cited by:

    1. Rod Tyers & Ying Zhang, 2011. "Appreciating the Renminbi," The World Economy, Wiley Blackwell, vol. 34(2), pages 265-297, February.
    2. Rod Tyers & Ying Zhang, 2014. "Real exchange rate determination and the China puzzle," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 28(2), pages 1-32, November.
    3. Jane Golley & Rod Tyers & Yixiao Zhou, 2018. "Fertility and savings contractions in China: Long‐run global implications," The World Economy, Wiley Blackwell, vol. 41(11), pages 3194-3220, November.
    4. Rod Tyers & Jenny Corbett, 2012. "Japan's economic slowdown and its global implications: a review of the economic modelling," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 26(2), pages 1-28, November.
    5. Jane Golley & Rod Tyers & Yixiao Zhou, 2016. "Contractions in Chinese Fertility and Savings: Long-run Domestic and Global Implications," RBA Annual Conference Volume (Discontinued), in: Iris Day & John Simon (ed.),Structural Change in China: Implications for Australia and the World, Reserve Bank of Australia.
    6. Tyers, Rod & Golley, Jane, 2008. "China’s Real Exchange Rate Puzzle," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 547-574.

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