Moving from a Poor Economy to a Rich One: The Contradictory Roles of Technology and Job Tasks
Eran Yashiv ()
Additional contact information
Eran Yashiv: Tel Aviv University
No 13131, IZA Discussion Papers from Institute of Labor Economics (IZA)
The phenomenon of workers moving from a poor to a rich economy is high on the political agenda. When a worker moves to a richer economy, what is gained by the move? The empirical challenge in giving an answer stems from the difficulty to disentangle income differences from many other determinants. Estimates are potentially biased due to substantial misspecification of the model, when omitting relevant determinants. The paper makes use of a unique data set on Palestinian workers, working locally and in Israel, that allows to isolate the pure effects of income differences with no other relevant factors. It explicitly addresses the question of what workers newly experience in the richer economy (higher productivity), what is taken from the poorer economy (human capital), and their choices in moving (self-selection). Importantly, it encompasses the constraints placed on workers in terms of the human capital skills demanded. The findings show that income differences affecting worker choice are made up of contradictory elements. Consistently with findings in the development accounting literature, productivity differences in favor of the richer economy, due to differences in TFP and in physical capital, are sizeable and operate to raise wages for movers. But lower job task values operate to lower wages for movers, who are offered manual tasks in the rich economy. The latter loss offsets the former gain. The paper emphasizes the idea that tasks are tied to locations. Workers choose a location-wage-task 'pack,' with movers getting low rewards to the skills bundled in their job tasks.
Keywords: movers and stayers; rich and poor economies; pure income effects; job tasks; TFP differentials; human capital differences; self-selection; skill bundle; development accounting (search for similar items in EconPapers)
JEL-codes: E24 J24 J31 O15 (search for similar items in EconPapers)
Pages: 86 pages
New Economics Papers: this item is included in nep-lma, nep-mac and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp13131
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().