How Does Labor Mobility Affect Income Convergence?

Jordan Rappaport

No 124, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: The neoclassical growth model is extended to allow for mobile labor. Following a negative shock to a small economy's capital stock, capital and labor frictions effect an equilibrium transition path during which wages remain below their steady-state level. Outmigration directly contributes to faster income convergence but also creates a disincentive for gross capital formation. The net result is that across a wide range of calibrations, the speed of income convergence is relatively insensitive to the degree of labor mobility.

Date: 2000-08-01
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Related works:
Journal Article: How does labor mobility affect income convergence? (2005)
Working Paper: How does labor mobility affect income convergence? (1999)
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