Two-way migration between similar countries

Udo Kreickemeier and Jens Wrona ()

No 1, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics

Abstract: We develop a model to explain two-way migration of high-skilled individuals between countries that are similar in their economic characteristics. High-skilled migration is explained by a combination of two features: In both countries there is a continuum of workers with differing abilities, which are private knowledge, and the production technology gives incentives to firms for hiring workers of similar ability. In the presence on migration cost, high-skilled workers self-select into the group of migrants, thereby ensuring they are hired together with other high-skilled migrants. The laissez-faire equilibrium features too much migration, explained by a negative migration externality, and as a result all individuals are worse of than in autarky. We also show that for suffciently low levels of migration cost the optimal level of migration is strictly positive. In extensions to our basic model, we consider the presence of an internationally immobile factor and find that in this case the possibility of aggregate gains from migration in the laissez-faire equilibrium emerges. We also show that our basic results are robust with respect to small differences in countries' technologies.

Keywords: Migration; Skilled Workers; Positive Assortative Matching; Externalities (search for similar items in EconPapers)
JEL-codes: D82 F22 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-mig
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Two-Way Migration between Similar Countries (2017)
Working Paper: Two-Way Migration between Similar Countries (2015)
Working Paper: Two-way migration between similar countries (2015)
Working Paper: Two-way migration between similiar countries (2015)
Working Paper: Two-way Migration Between Similar Countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:1

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