Why Don’t Labor and Capital Flow Between Young and Old Countries?

Lena Calahorrano () and Philipp an de Meulen
Additional contact information
Lena Calahorrano: RWTH Aachen University

No 200942, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: In this paper we investigate the twofold effect of demographics on international factor flows in a model with endogenous policy constraints on both foreign direct investment and migration. Factor price differences between industrialized and developing countries create economic incentives for migration to developed countries and for capital flows to less developed countries. However, political barriers to immigration in developed countries and expropriation risks in developing countries impede labor and capital flows. Using a political economy approach that takes into account different generations’ conflicting attitudes towards immigration and expropriation, we explore how these policy restrictions interact. We find that, in the presence of mobility constraints, larger demographic differences between countries need not result in an increase of factor flows.

Keywords: Demographic Change; Political Economy; Migration; Foreign Direct Investment (search for similar items in EconPapers)
JEL-codes: D78 F21 F22 J10 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009
New Economics Papers: this item is included in nep-int and nep-mig
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Forthcoming in

Downloads: (external link)
https://www.uni-marburg.de/en/fb02/research-groups ... 2009_calahorrano.pdf First version, 2009 (application/pdf)

Related works:
Working Paper: Why Don't Labor and Capital Flow Between Young and Old Countries? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:200942

Access Statistics for this paper

More papers in MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) Contact information at EDIRC.
Bibliographic data for series maintained by Bernd Hayo ().