Migration, FDI, and Welfare

Migration, FDI, and Welfare Atl Econ J https://doi.org/10.1007/s11293-018-9579-5 Paul Comolli International Atlantic Economic Society 2018 Abstract We investigate migration and foreign direct investment (FDI) for a small trading economy. Historically, immigration in small countries has been accompanied by FDI inflows (complementary capital movements). Based on the skill composition of migrants, empirical evidence finds that skilled immigration is accompanied by FDI inflows but unskilled immigration is accompanied by FDI outflows (substitutable capital movements). We prove that the Heckscher-Ohlin model cannot reconcile these appar- ently contradictory observations. We introduce a theoretical model in which capital and unskilled labor are sector specific, and demonstrate that this model can reconcile the historical and empirical observations on migration and FDI. . . . . . Keywords Labormigration FDI Internationaltrade Economicwelfare Fixedfactors Specific factors JEL F10 F20 Introduction Populist movements in the U.S. and abroad remind us that globalization, or the movement of goods, capital, and people across international borders, remains a very contentious issue for many citizens (natives). Native workers are inclined to view immigrants as competing for domestic jobs and driving down the real wage, whereas native firms are inclined to view immigrants as contributing to output and increasing the real return on capital. In fact, these http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Atlantic Economic Journal Springer Journals

Migration, FDI, and Welfare

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Publisher
Springer US
Copyright
Copyright © 2018 by International Atlantic Economic Society
Subject
Economics; Economics, general; Macroeconomics/Monetary Economics//Financial Economics; Microeconomics; International Economics; Public Finance
ISSN
0197-4254
eISSN
1573-9678
D.O.I.
10.1007/s11293-018-9579-5
Publisher site
See Article on Publisher Site

Abstract

Atl Econ J https://doi.org/10.1007/s11293-018-9579-5 Paul Comolli International Atlantic Economic Society 2018 Abstract We investigate migration and foreign direct investment (FDI) for a small trading economy. Historically, immigration in small countries has been accompanied by FDI inflows (complementary capital movements). Based on the skill composition of migrants, empirical evidence finds that skilled immigration is accompanied by FDI inflows but unskilled immigration is accompanied by FDI outflows (substitutable capital movements). We prove that the Heckscher-Ohlin model cannot reconcile these appar- ently contradictory observations. We introduce a theoretical model in which capital and unskilled labor are sector specific, and demonstrate that this model can reconcile the historical and empirical observations on migration and FDI. . . . . . Keywords Labormigration FDI Internationaltrade Economicwelfare Fixedfactors Specific factors JEL F10 F20 Introduction Populist movements in the U.S. and abroad remind us that globalization, or the movement of goods, capital, and people across international borders, remains a very contentious issue for many citizens (natives). Native workers are inclined to view immigrants as competing for domestic jobs and driving down the real wage, whereas native firms are inclined to view immigrants as contributing to output and increasing the real return on capital. In fact, these

Journal

Atlantic Economic JournalSpringer Journals

Published: Jun 4, 2018

References

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