South-North migration and trade: a survey

Maurice Schiff

No 1696, Policy Research Working Paper Series from The World Bank

Abstract: Before 1973, the labor market in Europe was tight and immigration from the South (chiefly North Africa and Southern Europe) was encouraged. But with the slowdown in growth in the mid-1970s, the rise in unemployment, and increased economic uncertainty, immigration came to be viewed as a burden by the destination countries. The demand for migration fell, but the supply did not. As United States (U.S.) and European Union (EU) opposition to immigration increased, some proposed using trade policy to deal with immigration, with the assumption that trade is a substitute for migration. Using both one-sector and two-sector models, the author examines the relationship between trade and migration, as well as the welfare implications of different trade and migration policies for both sending and receiving countries. The results are ambiguous: opening markets in the North and providing foreign investment and foreign aid to the sending countries is more likely to slow down migration from Eastern Europe to the EU than from Africa to the EU or from Latin America to the U.S. It may also worsen the skill composition of migration from Africa to the EU and from Latin America to the U.S. Two results hold, nevertheless: the South gains from trade liberalization in either the North or the South, and the North gains from imposing an immigration tax. The policy implications are clear: the South should liberalize trade, while the North should impose an (optimal) immigration tax.

Keywords: Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Public Health Promotion; Municipal Financial Management; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Health Monitoring&Evaluation; Municipal Financial Management (search for similar items in EconPapers)
Date: 1996-12-31
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Citations: View citations in EconPapers (13)

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