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Welfare and equity impacts of cross-border factor mobility in Bangladesh: A general equilibrium analysis

Sharif M. Hossain and Nobuhiro Hosoe ()

Economic Modelling, 2020, vol. 87, issue C, 172-184

Abstract: We develop a dynamic computable general equilibrium model with cross-border factor mobility to assess the impacts of a foreign wage shock and the effects of counteractive policy measures in Bangladesh. The model features migration of workers and foreign direct investment (FDI) in the ready-made garments (RMG) sector. Our simulation results show that returning migrants induced by a foreign wage fall would reduce household welfare by lowering wages and increasing unemployment, particularly for unskilled workers in the domestic labor market. To counteract this negative shock, FDI promotion in the RMG sector and a human-capital development program are considered. The former policy minimizes the negative impacts of the foreign labor market shock, while a combination of both policies is more equitable.

Keywords: Migration; Remittances; Foreign direct investment; Computable general equilibrium analysis (search for similar items in EconPapers)
JEL-codes: C68 F21 F22 O15 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Welfare and Equity Impacts of Cross-Border Factor Mobility in Bangladesh: A General Equilibrium Analysis (2019) Downloads
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DOI: 10.1016/j.econmod.2019.07.017

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