Modelling trade policy scenarios: Macroeconomic and trade effects of restrictions in cross border labour mobility

Donal Smith, Przemyslaw Kowalski and Frank van Tongeren

No 259, OECD Trade Policy Papers from OECD Publishing

Abstract: COVID-19 has drawn renewed attention to the economic importance of cross border mobility. Frictions in cross border mobility of labour can substantially impact the economy and international trade, by causing a long-term decrease in net migration that would alter the labour supply in many economies. To capture these macro-economic and trade effects, a global macroeconomic model (NiGEM) and a general equilibrium trade model (METRO) were used to simulate a stylised scenario equivalent to a 20% reduction in net-migration accumulated over the past ten years for all economies and regions. In OECD countries, this would translate into a reduction of the overall labour supply, and this shock would shift some economic activity towards non-OECD countries. At the sectoral level, exports of labour intensive manufacturing activities in OECD countries would contract, with electronics (13% of the total reduction of exports in the long term), automobiles (12%) and pharmaceuticals (9%) among the most affected.

Keywords: Computable general equilibrium model; International labour mobility; International trade; METRO model; NIGEM macroeconometric model; Sectoral economic effects (search for similar items in EconPapers)
JEL-codes: C63 E10 F22 F47 N10 (search for similar items in EconPapers)
Date: 2022-02-23
New Economics Papers: this item is included in nep-int, nep-lab, nep-mac and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:oec:traaab:259-en

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