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Two-way migration between similiar countries

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  • Kreickemeier, Udo
  • Wrona, Jens

Abstract

We develop a model to explain two-way migration of high-skilled individuals between countries that are similar in their economic characteristics. High-skilled migration results from the combination of workers whose abilities are private knowledge, and a production technology that gives incentives to firms for hiring workers of similar ability. In the presence of migration cost, high-skilled workers self-select into the group of migrants. The laissez-faire equilibrium features too much migration, explained by a negative migration externality. We also show that for sufficiently low levels of migration cost the optimal level of migration, while smaller than in the laissez-faire equilibrium, is strictly positive. Finally, we extend our model into different directions to capture stylized facts in the data and show that our baseline results also hold in these more complex modelling environments.

Suggested Citation

  • Kreickemeier, Udo & Wrona, Jens, 2015. "Two-way migration between similiar countries," Dresden Discussion Paper Series in Economics 02/15, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
  • Handle: RePEc:zbw:tuddps:0215
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    Cited by:

    1. Dequiedt, Vianney & Zenou, Yves, 2013. "International migration, imperfect information, and brain drain," Journal of Development Economics, Elsevier, vol. 102(C), pages 62-78.
    2. Inga Heiland & Wilhelm Kohler, 2013. "Heterogeneous Workers, Trade, and Migration," CESifo Working Paper Series 4387, CESifo Group Munich.
    3. Nikolaj Malchow-Møller & Jakob R. Munch & Jan Rose Skaksen, 2011. "Do Foreign Experts Increase the Productivity of Domestic Firms?," Norface Discussion Paper Series 2011014, Norface Research Programme on Migration, Department of Economics, University College London.
    4. Bonnet, Céline & Schain, Jan Philip, 2017. "An empirical analysis of mergers: Efficiency gains and impact on consumer prices," DICE Discussion Papers 244, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    5. Knauth, Florian & Wrona, Jens, 2018. "There and back again: A simple theory of planned return migration," DICE Discussion Papers 290, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

    More about this item

    Keywords

    International Migration; Skilled Workers; Positive Assortative Matching;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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