A temporary equilibrium model of international migration with overlapping generations and incomplete information

Siegfried K. Berninghaus and Hans G. Seifert-Vogt

No 86, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: The paper deals with existence and properties of temporary migration equilibria with an overlapping generations structure in a two-country-world. Individuals are living for two periods. As a young individual they are supposed to be incompletely informed about wage rates and the quality of life they will encounter in both countries during the next period. They supply their labour force in each living period in either of the two countries such that total expected utility (of the wage rate and the quality of life) over the planning horizon is maximized. In the first part of the paper we give sufficient conditions such that there exists a temporary migration equilibrium (in a given period) that is a tuple of migration flows between the two countries and a wage profile such that the labour markets in both countries are balanced simultaneously. In the second part of the paper some interesting properties of migration equilibria are analyzed. Particularly the effects of differing distributions of the quality of life in the two countries and of differing degrees of information of the individuals on migration equilibria are investigated. Furthermore it is shown that incomplete information alone suffices to induce migration flows even between "identical" countries.

Date: 1989
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