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Globalizing labor and the world economy: the role of human capital

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Delogu, Marco [Università degli Studi di Sassari] Docquier, Frédéric [UCL] Machado, Joël [Luxembourg Institute of Socio-Economic Research (LISER)]

We develop a dynamic model of the world economy that jointly endogenizes individual decisions about fertility, education and migration. We then use it to compare the short- and long-term effects of immigration restrictions on the world distribution of income. Our calibration strategy replicates the economic and demographic characteristics of the world, and allows us to proxy bilateral migration costs and visa costs for two classes of workers and for each pair of countries. In our benchmark simulations, the world average level of income per worker increases by 12% in the short term and by approximately 52% after one century. These results are highly robust to our identifying strategy and technological assumptions. Sizable differences are obtained when our baseline (pre-liberalization) trajectory involves a rapid income convergence between countries or when we adjust visa costs for a possible upward bias. Our quantitative analysis reveals that the effects of liberalizing migration on human capital accumulation and income are gradual and cumulative. Whatever is the size of the short-term gain, the long-run impact is 4 to 5 times greater (except under a rapid convergence in income).

Document type Article de périodique (Journal article) – Article de recherche
Access type Accès restreint
Publication date 2018
Language Anglais
Journal information "Journal of Economic Growth" - Vol. 23, no.2, p. 223-258 (2018)
Peer reviewed yes
Publisher Springer Nature
issn 1381-4338
e-issn 1573-7020
Publication status Publié
Affiliation UCL - SSH/LIDAM/IRES - Institut de recherches économiques et sociales
Keywords Migration ; Migration Policy ; Liberalization ; Growth ; Human capital ; Fertility ; Inequality
Links
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Bibliographic reference Delogu, Marco ; Docquier, Frédéric ; Machado, Joël. Globalizing labor and the world economy: the role of human capital. In: Journal of Economic Growth, Vol. 23, no.2, p. 223-258 (2018)
Permanent URL http://hdl.handle.net/2078.1/200616