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|dc.description.abstract||This paper examines the welfare implications associated with different degrees of diversity orsimilarity between migrants and natives under both migration and trade. We use a generalequilibrium model of migration, human capital and social capital and find that there are threeequilibrium solutions: an internal one with half the population of each country migrating to theother country, and two corner solutions where everyone ends up in one of the two countries.The internal solution is unstable and is unlikely to be reached under different levels of humancapital across the two countries. The corner solutions are stable and will be reached undermost circumstances. If there are human capital differences across the two populations,everyone ends up in the country with the highest initial level of human capital. Welfare underany of the equilibrium solutions rises with the diversity in human capital and decreases withthe diversity in social capital between migrants and natives. Trade and both migrationsolutions reduce inequality between the populations of the two countries by the sameamount. In addition, trade and migration are not equivalent if social capital is present: thehighest welfare is obtained with migration under the corner solution, the second highestwelfare is obtained with trade, and the lowest welfare is obtained with migration under theinternal solution. The first two solutions (third solution) raise (may raise or reduce) welfarerelative to the no-migration case.||en_US|
|dc.publisher|||aInstitute for the Study of Labor (IZA) |cBonn||en_US|
|dc.relation.ispartofseries|||aIZA Discussion paper series |x1279||en_US|
|dc.title||Migration and Diversity : Human versus Social Capital||en_US|
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