Globalizing labor and the world economy: the role of human capital

Marco Delogu, Frédéric Docquier and Joël Machado

No 2017-16, LISER Working Paper Series from Luxembourg Institute of Socio-Economic Research (LISER)

Abstract: We develop a dynamic model of the world economy that jointly endogenizes individual decisions about fertility, education and migration. We then use it to compare the shortand long-term effects of immigration restrictions on the world distribution of income. Our calibration strategy replicates the economic and demographic characteristics of the world, and allows us to proxy bilateral migration costs and visa costs for two classes of workers and for each pair of countries. In our benchmark simulations, the world average level of income per worker increases by 12% in the short term and by approximately 52% after one century. These results are highly robust to our identifying strategy and technological assumptions. Sizable differences are obtained when our baseline (pre-liberalization) trajectory involves a rapid income convergence between countries or when we adjust visa costs for a possible upward bias. Our quantitative analysis reveals that the effects of liberalizing migration on human capital accumulation and income are gradual and cumulative. Whatever is the size of the short-term gain, the long-run impact is 4 to 5 times greater (except under a rapid convergence in income).

Keywords: Migration; Migration policy; Liberalization; Growth; Human Capital; Fertility; Inequality (search for similar items in EconPapers)
JEL-codes: F22 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2017-11
New Economics Papers: this item is included in nep-cmp, nep-hrm, nep-int, nep-lab and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Journal Article: Globalizing labor and the world economy: the role of human capital (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:irs:cepswp:2017-16

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