Discussion Paper Series, Wilfried-Guth-Stiftungsprofessur für Ordnungs- und Wettbewerbspolitik 2016-05
This contribution investigates the relationship between economic freedom and international migration. We argue that higher levels of economic freedom in the source countries of migration may discourage migration by generating more economic security, providing more economic opportunities and stimulating overall economic activity. Using a panel dataset on migration from 91 developing and emerging to the 20 most attractive OECD destination countries for the 1980-2010 period, we find that more economic freedom at home discourages high-skilled migration but does not matter to low-skilled migration. The negative association between economic freedom and high-skilled emigration also holds when we estimate (dynamic) panel models that allow for endogeneity in the economic freedom-migration nexus. Our findings suggest that high-skilled individuals are especially responsive to the economic incentives arising from economic freedom. This is especially true for those components of economic freedom associated with the provision of economic security in the form of wellprotected property rights, sound money and limited government involvement in the economic life.
economic freedom international migration low-skilled and high-skilled migration