Migration, technology diffusion and convergence in a two-country AK Growth Model

Bright Isaac Ikhenaode and Carmelo Parello

MPRA Paper from University Library of Munich, Germany

Abstract: This paper proposes a two-country AK model of growth with cross-country knowledge diffusion and endogenous migration to study the relationship between migration, income inequality and economic growth. In contrast with mainstream AK literature, we show that introducing knowledge diffusion from frontier to non-frontier countries makes AK models predict conditional convergence, with migration playing an important role in speeding up the catching-up process of non-frontier countries. When testing the robustness of the policy implications of the AK literature, we find that subsidizing capital accumulation in frontier countries stimulates migration and worldwide growth, but also that it increases cross-country inequalities in terms of both income and technology. On the contrary, subsidizing capital accumulation in non-frontier countries reduces migration and mitigates inequalities worldwide, but has no effects on the long-run pace of economic growth of the two countries.

Keywords: two-country model; endogenous growth; labor migration; technology transfer; growth policy (search for similar items in EconPapers)
JEL-codes: E1 F1 O4 (search for similar items in EconPapers)
Date: 2022-11-11
New Economics Papers: this item is included in nep-gro, nep-int, nep-mig, nep-tid and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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