English, Article, Journal or magazine article edition: Equipping Immigrants: Migration Flows and Capital Movements Fabian Lange; Douglas Gollin

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Equipping Immigrants: Migration Flows and Capital Movements
Author
  • Fabian Lange
  • Douglas Gollin
Physical Description
  • preprint
Notes
  • This paper explores the extent to which migration-related capital flows can explain the variation in investment rates and current and capital account imbalances across OECD countries. Migrants must be equipped with machines, and the resulting demands for capital are likely, all else being equal, to generate cross-border flows of capital. We analyze and test the empirical predictions of a simple model with endogenous capital and labor flows. This model allows for exogenous variation in the supply of migrant labor as well as in local production conditions. Empirically, the observed correlations in investment rates, capital and labor flows can best be explained by an inelastic supply of migrant labor and large exogenous variation in local production conditions over time compared to the exogenous variation in the supply of migrant labor. We then examine how much the increase in net migration rates contributed to the increase in the US current account deficit since 1960. Between 1960 and 2000, the US current account declined by about 4% of annual GDP. The increase in migration contributed about 1% of GDP to this decline.
  • RePEc:crm:wpaper:200914
  • The large current account and capital account imbalances among OECD countries continue to attract attention among policy makers and researchers. This paper explores the extent to which migration-related capital flows can explain the movements and magnitudes of current and capital account imbalances in OECD countries. Migrants must be equipped with machines, and the resulting demands for capital are likely, all else being equal, to generate cross-border flows of capital. We analyze the empirical predictions of a simple model with endogenous capital and labor flows. This model allows for exogenous variation in the supply of capital and labor as well as in local production conditions. Empirically, we find that the observed correlation in investment rates, capital and labor flows are roughly consistent with a model in which capital is elastically supplied at a constant world interest rate, but where the supply of migrants to local economies varies exogenously. We then examine how much the increase in net migration rates contributed to the increase in the US current account deficit since 1960. Between 1960 and 2000, the US current account declined by about 4% of annual GDP. The increase in migration contributed about 1% of GDP to this decline.
  • RePEc:wil:wileco:2008-18
  • Both policy makers and researchers have devoted considerable attention in recent years to the large current account and capital account imbalances among OECD countries. In particular, the size of the United States current account deficit has attracted intense attention and spawned numerous explanations. There are undoubtedly many reasons for this deficit, including government fiscal policy imbalances, but one explanation that has not previously received much attention is that current account deficits and the matching capital inflows are responses to international flows of labor. Migrants must be equipped with machines, and the resulting demands for capital are likely, all else being equal, to generate cross-border flows of capital. This paper explores the extent to which migration-related capital flows can explain the movements and magnitudes of current and capital account imbalances in OECD countries.
  • migration, capital flows
  • RePEc:iza:izadps:dp2745
Language
  • English
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