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Migration and the skill composition of the labor force : the impact of trade liberalization in developing countries

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  • Lopez, Ramon
  • Schiff, Maurice

Abstract

In the standard Heckscher-Ohlin model, trade and migration are substitutes (that is, migration decreases with trade liberalization). The authors add four factors to the standard Heckscher-Ohlin model: labor skill levels (skilled or unskilled), international labor mobility, migration costs, and financing constraints. They examine two types of simulation. Case one applies to countries in the post-demographic transition stage, with a stable population. This includes countries of Eastern Europe and the former Soviet Union. Case two applies to countries with rapidly growing populations, such as Egypt, El Salvador, Mexico, and Morocco. In case one, trade liberalization raises emigration of the unskilled (and has no effect on emigration of the skilled), while greater protection raises emigration of the skilled (and has no effect on emigration of the unskilled). That is, any change in trade policy raises total emigration, but trade liberalization improves the average skill level of the labor force and increased protection lowers it. In case two, trade liberalization raises emigration of the unskilled and reduces emigration of the skilled. That is, the average skill level rises and thenet effect on total emigration is ambiguous. The opposite occurs with increased protection. In both cases, the average skill level of the population falls when protection increases in the presence of international migration, high migration costs, and financing constraints. Under the same circumstances, the skill level rises under trade liberalization.

Suggested Citation

  • Lopez, Ramon & Schiff, Maurice, 1995. "Migration and the skill composition of the labor force : the impact of trade liberalization in developing countries," Policy Research Working Paper Series 1493, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1493
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    References listed on IDEAS

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    1. Russell, S.S. & Teitelbaum, M.S., 1992. "International Migration and International Trade," World Bank - Discussion Papers 160, World Bank.
    2. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
    3. Adams, Richard H., Jr., 1991. "The effects of international remittances on poverty, inequality, and development in rural Egypt:," Research reports 86, International Food Policy Research Institute (IFPRI).
    4. Wong, Kar-Yiu, 1983. "On choosing among trade in goods and international capital and labor mobility : A theoretical analysis," Journal of International Economics, Elsevier, vol. 14(3-4), pages 223-250, May.
    5. Faini, Riccardo & Venturini, Alessandra, 1993. "Trade, aid and migrations: Some basic policy issues," European Economic Review, Elsevier, vol. 37(2-3), pages 435-442, April.
    6. Jagdish N. Bhagwati, 1978. "Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, January.
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    Cited by:

    1. Amaranta Melchor del Río & Susanne Thorwarth, 2006. "Tomatoes or Tomato Pickers? - Free Trade and Migration in the NAFTA Case," Working Papers 0429, University of Heidelberg, Department of Economics, revised Dec 2006.
    2. Prashant Bharadwaj & James Fenske, 2011. "Partition, Migration, and Jute Cultivation in India," Journal of Development Studies, Taylor & Francis Journals, vol. 48(8), pages 1084-1107, January.
    3. Holzmann, Robert & Munz, Rainer, 2004. "Challenges and opportunities of international migration for the EU, its member states, neighboring countries, and regions : a Policy Note," Social Protection and Labor Policy and Technical Notes 30160, The World Bank.
    4. Zhu, Nong & Luo, Xubei, 2008. "The impact of remittances on rural poverty and inequality in China," Policy Research Working Paper Series 4637, The World Bank.

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