Technological superiority and the losses from migration

Donald R. Davis () and David Weinstein ()

No 0102-60, Discussion Papers from Columbia University, Department of Economics

Abstract: Two facts motivate this study. (1) The United States is the world's most productive economy. (2) The US is the destination for a broad range of net factor inflows: unskilled labor, skilled labor, and capital. Indeed, these two facts may be strongly related: All factors seek to enter the US because of the US technological superiority. The literature on international factor flows rarely links these two phenomena, instead considering one-at-atime analyses that stress issues of relative factor abundance. This is unfortunate, since the welfare calculations differ markedly. In a simple Ricardian framework, a country that experiences immigration of factors motivated by technological differences always loses from this migration relative to a free trade baseline, while the other country gains. We provide simple calculations suggesting that the magnitude of the losses for US natives may be quite large¨C $72 billion dollars per year or 0.8 percent of GDP.

Date: 2002
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Working Paper: Technological Superiority and the Losses from Migration (2002)
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