Ramifications of migration on origin and destination countries
In a recently available paper (di Giovanni, Levchenko, and Ortega 2013), we measure the welfare ramifications of migration from a worldwide perspective in a way analogous to how economists measure the gains from international trade. Namely, we compare the welfare on the globe economy under current degrees of migration to welfare in a counterfactual, no-migration equilibrium.
The main top features of our framework are:
- We model a big amount of worker heterogeneity by level of skill, country of birth, and country of residence.
- We incorporate international remittances.
- We take into account each country’s amount of openness to trade.
That is potentially important because, in a number of economic models, the consequences of immigration are mitigated by the amount of trade openness. Finally, building on Melitz (2003), we assume a monopolistically competitive economy where heterogeneous firms face both variable and fixed costs of serving each export market, and our model highlights the interplay between workers and firms. We distinguish between your long run, where the group of potential firms throughout the market adjusts to fulfill the free-entry condition, and the short run, where the group of potential (however, not actual) projects throughout the market is fixed. The model is calibrated to complement country-level productivity, openness to trade, degrees of migration and remittances, the firm-level productivity distribution, and the observed skill distributions of natives and immigrants (predicated on the data made by Docquier et al. 2009, 2010).