Technological superiority and the losses from migration

Donald R. Davis; David E. Weinstein

Technological superiority and the losses from migration
Davis, Donald R.
Weinstein, David E.
Working papers
Center on Japanese Economy and Business
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Center on Japanese Economy and Business Working Papers
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Two facts motivate this study. (1) The United States is the world's most productive economy. (2) The US is the destination for a broad range of net factor inflows: unskilled labor, skilled labor, and capital. Indeed, these two facts may be strongly related: All factors seek to enter the US because of the US technological superiority. The literature on international factor flows rarely links these two phenomena, instead considering one-at-a-time analyses that stress issues of relative factor abundance. This is unfortunate, since the welfare calculations differ markedly. In a simple Ricardian framework, a country that experiences immigration of factors motivated by technological differences always loses from this migration relative to a free trade baseline, while the other country gains. We provide simple calculations suggesting that the magnitude of the losses for US natives may be quite large- $72 billion dollars per year or 0.8 percent of GDP.
Economics, Commerce-Business
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Suggested Citation:
Donald R. Davis, David E. Weinstein, 2002, Technological superiority and the losses from migration, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:288.

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