Labor Mobility, Trade, and Social Capital

Maurice Schiff

Review of International Economics, 2004, vol. 12, issue 4, 630-642

Abstract: Labor market integration raises welfare in the absence of distortions. This paper examines labor and goods market integration in a general‐equilibrium model with social capital. The findings are: (i) labor market integration has an ambiguous impact on welfare, and raises it if the goods and labor skills are sufficiently different; (ii) compared to Pareto optimum, labor mobility (social capital) is excessively large (depleted); (iii) trade is superior to labor market integration if trading costs are no higher than private migration costs, otherwise the outcome is ambiguous; and (iv) the creation of new institutions in response to labor market integration has an ambiguous impact on welfare.

Date: 2004
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https://doi.org/10.1111/j.1467-9396.2004.00471.x

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Working Paper: Labor Mobility, Trade and Social Capital (2004)
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