Emigration and wage inequality

Marjit, Sugata; Kar, Saibal

doi:10.1016/j.econlet.2005.02.003

Cited by 112 publications

(75 citation statements)

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“…In particular, this literature addresses the question how emigration of skilled and unskilled labor from low wage to high wage countries affects the degree of wage inequality in the low wage country. Marjit and Kar (2005) provide a simple model and derive an intuitively appealing condition under which wage distribution may go against the residual workers of the emigrating group. Using a specific factor model, this study shows that regardless of the emigrating category -skilled or unskilled -return to capital declines following emigration and subsequently raises the return for workers of the non-emigrating type.…”

Section: Introductionmentioning

confidence: 99%

“…Following Marjit and Kar (2005) several papers have extended this emigration-wage inequality link and provided valuable insights. For example, Oladi and Beladi (2007) introduce non-traded goods in connection with emigration of skilled and unskilled workers from a small open economy and evaluate its impact on both source and host countries.…”

Section: Introductionmentioning

confidence: 99%

“…This paper considers a 3 X 3 model where two sectors produce X and Y by using skilled and unskilled labor as specific factors and capital as the mobile factor as in Marjit and Kar (2005). There is a third sector that produces Z by using both types of labor and capital.…”

Section: Introductionmentioning

confidence: 99%

“…Existence of the third sector allows participation of both types of labor in one activity and thus captures a more realistic scenario by broadening the spectrum of analysis. In the Marjit and Kar (2005) specific-factor type framework emigration of either type of labor must improve the real wage of both while the owners of capital suffer, such that wage inequality or wage distribution is the key focus.…”

Section: Introductionmentioning

confidence: 99%

“…In specific factor models (Jones, 1971) no sector can completely vanish because of the necessity of employing the specific factor. Of course, they do not consider the possibility that such specific factor is internationally mobile.In a standard Heckscher-Ohlin framework with two factors, however, a vanishing sector is clearly feasible under complete specialization.This paper considers a 3 X 3 model where two sectors produce X and Y by using skilled and unskilled labor as specific factors and capital as the mobile factor as in Marjit and Kar (2005). There is a third sector that produces Z by using both types of labor and capital.…”

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confidence: 99%

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Emigration, Wage Inequality and Vanishing Sectors

Marjit

Kar

2009

SSRN Journal

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Emigration leads to finite changes in structure of production and sectors vanish because they cannot pay higher wages. Does emigration of one type of labor hurt the other non-emigrating type in this set up? We demonstrate various scenarios when real income of the emigrating and the non-emigrating type do not move together and in the process generalize some of the existing results in the literature. In particular emigration can lead to a drastic change in the degree of inequality depending on which sectors survive in the post-emigration scenario. IntroductionIn recent years a body of literature has emerged analyzing the impact of international labor mobility on wage distribution in the source country. In particular, this literature addresses the question how emigration of skilled and unskilled labor from low wage to high wage countries affects the degree of wage inequality in the low wage country. Marjit and Kar (2005) provide a simple model and derive an intuitively appealing condition under which wage distribution may go against the residual workers of the emigrating group. Using a specific factor model, this study shows that regardless of the emigrating category -skilled or unskilled -return to capital declines following emigration and subsequently raises the return for workers of the non-emigrating type.Indeed, in some cases residual members of the non-emigrating factor may benefit more than the emigrating group affecting wage inequality in an unexpected manner. These and various other issues that wage inequality spawned by factor mobility discussed so far necessitate a synthetic analysis. We therefore offer a model with greater generality within which many of these results should hold. In addition, we demonstrate that factor mobility can be critically responsible for 'vanishing' sectors in the source Between two alternative occupations a factor will always choose the one that promises higher rate of return. As factors of production are allowed free entry and exit in a global space the general lesson from trade theory suggests that the set of goods produced in a country may change along with that. In particular, given world prices certain production activities/services might turn out to be unprofitable for certain countries. Such 'finite' changes in trade theory do not receive much attention but surely opens up interesting possibilities. Recently, Jones (1996) and Jones and Findlay (2007, Letters) have considered implications of vanishing sectors in a different context. Finite changes typically refer to circumstances when the output contraction is fairly drastic.Jones and Marjit (1992) provide an interesting perspective in a many factor many commodity world. In specific factor models (Jones, 1971) no sector can completely vanish because of the necessity of employing the specific factor. Of course, they do not consider the possibility that such specific factor is internationally mobile.In a standard Heckscher-Ohlin framework with two factors, however, a vanishing sector is clearly feasible under...

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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