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The Welfare Impact of Global Migration in the OECD Countries

Amandine Aubry () and Michał Burzyński ()

No 2013035, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: In this paper we investigate the impact of global migration on the welfare of native workers in the OECD countries. We develop a multi-country, general equilibrium model with trade and migration. Labor is assumed to be heterogeneous, whereas the wages, prices, trade flows, the mass of varieties of goods and the TFP levels are endogenized. The issue of the redistribution is also examined. The main result of this paper is the quantification of the welfare effects of migration for different groups of workers. These outcomes depend substantially on the size and the structure of migration in the OECD countries, and vary with educational levels of migrants. We consider the overall effect as a sum of three channels: the market size, wage and TFP effects. The key finding is that the market size effect plays a vital role in determining the benefits and costs of migration. Its consequences are prone to spillovers due to the international trade. Analyzing the shocks on the stock and the 1990-2000 flow of migrants, we discuss different patterns of the macroeconomic and welfare impacts of non-OECD (South-North) and OECD (North-North) migration. Nearly all the OECD countries benefit from the South-North migration. On the contrary, there are only few economies which are gaining from the North-North migration. Finally, we confirm a common belief that migration increases inequality between poor and wealthy citizens of the OECD countries, although this effect is mainly due to the intra-OECD emigration.

Keywords: migration; market size; inequalities; general equilibrium; brain drain (search for similar items in EconPapers)
JEL-codes: C68 F22 J24 (search for similar items in EconPapers)
Pages: 39
Date: 2013-12-24, Revised 2015-01-07
New Economics Papers: this item is included in nep-int and nep-mig
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Related works:
Journal Article: The welfare impact of global migration in OECD countries (2016) Downloads
Working Paper: The Welfare Impact of Global Migration in OECD Countries (2016) Downloads
Working Paper: The Welfare Impact of Global Migration in OECD Countries (2016) Downloads
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