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The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter-and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We calibrate the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which would occur if barriers to labor mobility are reduced. The lower barriers to migration result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe. JEL Codes: F12, F22, J61. * Susana Iranzo, Universitat Rovira Virgili, Avda. Universitat 1, Reus 43204, Spain, susana.iranzo@urv.cat. Giovanni Peri, University of California, Davis, One Shields Avenue, Davis CA 95616, gperi@ucdavis.edu. We thank Jim Rauch and two anonymous referees for helpful comments and suggestions. Jaime Alonso, Giovanni Facchini, Robert Feenstra, James Harrigan, Anna Maria Mayda, Andres Rodriguez-Clare, Jakob von Weizsäcker and participants in several seminars and conferences also provided helpful suggestions. Peri acknowledges the John D. and Catherine T. MacArthur Foundation for generously funding his research on international migrations. Keywords:

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe recent literature on externalities of schooling in the U.S. is rather mixed: positive external effects of average education are hardly found at all, while often positive externalities from the share of college graduates are identified. This paper proposes a simple model to explain this fact and tests it using U.S.states data. The key idea is that advanced technologies, associated with high total factor productivity and high returns to skills, are complementary to highly educated workers, as opposed to traditional technologies, complementary to less educated. Our calibrated model predicts that workers with twelve years of schooling (high school graduates) are indifferent between traditional and advanced technologies, while more educated workers adopt the advanced technologies and benefit from the larger private and social returns associated to them. Only shifts in education above high school graduation are therefore associated with positive social returns stemming from more efficient technologies. The empirical analysis, using compulsory attendance laws, immigration of highly educated workers and the location of land-grant colleges as instruments confirm that an increase in the share of college graduates, but not an increase in the share of high school graduates, had large positive production externalities in U.S. States.

This paper re-examines the relationship between growth in per capita income and environmental degradation using econometric techniques appropriate for smooth transition regressions with panel data. This is a more intuitive and flexible methodology than the polynomial models widely used in the literature, and it can reconcile some of the mixed results found previously. The methodology is applied to carbon dioxide emissions from non-OECD countries over the period . Although there is no evidence of environmental Kuznets curve (EKC), we find two regimes, namely a low-income regime where emissions accelerate with economic growth and a middle to high-income regime associated with a deceleration in environmental degradation.

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