Ricerc@Sapienza

We present a North-South model with labor market frictions and labor migration to study the dynamic implications of workers mobility on employment, capital accumulation and welfare. In the baseline model, the Northern country is able to control immigration flows by setting a cap on the number of foreign workers. We find that, despite an increase in migration displaces native employment in the short-run, a permanent raise of the migration cap stimulates capital accumulation, improves labor market conditions and increases social welfare in the long run.

We present a dynamic North-South model with search frictions and endogenous labor migration to study the long-run implications of labor factor mobility on labor market conditions and welfare. In the model, the high-TFP country (North) acts as the destination country for migration, while the low-TFP country (South) acts as the origin country. We prove that there always exists a unique steady-state equilibrium for the world economy, and find that a permanent increase in migration effort causes per capita income to rise in North and to fall in South.