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Efficiency Gains from Liberalizing Labor Mobility

Frédéric Docquier (), Joël Machado () and Khalid Sekkat

No 745, Working Papers from Economic Research Forum

Abstract: This paper quantifies the effect of a complete liberalization of international migration on the world GDP and its distribution across regions. We build a general equilibrium model endogenizing bilateral migration and wage disparities between and within countries. A dual strategy is developed to identify total migration costs and their legal component. Contrary to existing studies, we obtain limited efficiency gains. Accounting for incompressible moving costs strongly reduces the benefits from liberalization. When we account for endogenous productivity, congestion, heterogeneous education quality, imperfect substitution between migrants and natives, and network effects, efficiency gains reach about 4 percent of the world GDP.

Date: 2013-04, Revised 2013-04
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Published by The Economic Research Forum (ERF)

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Related works:
Journal Article: Efficiency Gains from Liberalizing Labor Mobility (2015) Downloads
Working Paper: Efficiency gains from liberalizing labor mobility (2012) Downloads
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