Reference : Efficiency gains from liberalizing labor mobility
Scientific journals : Article
Business & economic sciences : International economics
Efficiency gains from liberalizing labor mobility
Machado Carneiro, Joël mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Docquier, Frédéric []
Sekkat, Khalid []
Scandinavian Journal of Economics
Blackwell Publishing
Yes (verified by ORBilu)
United Kingdom
[en] migration ; liberalization
[en] 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).

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