FDI, Infrastructure and the Welfare Effects of Labour Migration

Frank Barry

No 3380, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A model of a small open economy with open capital and labour markets is presented. Labour demand is based on capital mobility and increasing returns in production. Migration decisions are based on the relative attractiveness of regions in terms of the stock of infrastructure, including its tax cost and the degree of congestion, and the level of wages prevailing. Equilibria are not Pareto-efficient because individuals do not take account of the impact of their actions on the level of wages prevailing, the extent of the tax base to finance infrastructural provision, or the degree of congestion. The model generates new insights into a range of policy issues that surfaced over the course of the recent Irish boom.

Keywords: Foreign; direct; investment (search for similar items in EconPapers)
JEL-codes: F21 F22 H54 (search for similar items in EconPapers)
Date: 2002-05
New Economics Papers: this item is included in nep-geo and nep-ifn
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Citations: View citations in EconPapers (5)

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