Efficiency Gains from Liberalizing Labor Mobility

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, we quantify the effect of a complete liberalization of cross-border migration on the world GDP and its distribution across regions. We build a general equilibrium model, endogenizing bilateral migration and income disparities between and within countries. Our calibration strategy uses data on effective and potential migration to identify total migration costs and visa costs by education level. Data on potential migration reveal that the number of people in the world who have a desire to migrate is around 400 million. This number is much smaller than that predicted in previous studies, and reflects the existence of high “incompressible” migration costs. In our benchmark framework, liberalizing migration increases the world GDP by 11.5–12.5 percent in the medium term. Our robustness analysis reveals that the gains are always limited, in the range of 7.0 percent (with schooling externalities) to 17.9 percent (if network effects are accounted for).
Original languageEnglish
Pages (from-to)303-346
Number of pages44
JournalScandinavian Journal of Economics
Volume117
Issue number2
DOIs
Publication statusPublished - Apr 2015
Externally publishedYes

Keywords

  • Liberalization
  • migration
  • migration costs
  • migration policies

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