Economic Benefit of Temporary Migration with Firm Heterogeneity

Journal: THE RITSUMEIKAN ECONOMIC REVIEW

Volume: 65

Issue: 4

Abstract:

The paper uses a monopolistic competition model with heterogeneous firms and productivity asymmetry to evaluate the effects of temporary movement of labour from a developing to a developed country. In autarky, migration induces a decrease of survival productivity threshold implying that less productive firms of the receiving country are now able to survive. The receiving country also enjoys an increase in the welfare because of decrease of the price level. However the people living in the source country experience a decrease in welfare when remittances are not taken into consideration. In open economy the exporting firms of the receiving and domestic firms of sending countries experience a fall in minimum required productivity threshold. The result on the welfare and price level of the sending and receiving countries are ambiguous.

Source: Manual

Preferred by: Mehdi Chowdhury