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Title:Two-way migration between similar countries PDF Logo
Authors:Kreickemeier, Udo
Wrona, Jens
Issue Date:2011
Series/Report no.:University of Tübingen working papers in economics and finance 1
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.
Subjects:Migration
Skilled Workers
Positive Assortative Matching
Externalities
JEL:F22
D82
Persistent Identifier of the first edition:urn:nbn:de:bsz:21-opus-55925
Document Type:Working Paper
Appears in Collections:University of Tübingen Working Papers in Economics and Finance

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