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Journal of Economic Integration 2004 December;19(4) :727-741.
DOI: https://doi.org/10.11130/jei.2004.19.4.727
International Migration of Skilled and Unskilled Labour, Welfare and Skilled-unskilled Wage Inequality: a Simple Model
Sarbajit Chaudhuri 
University of Calcutta
Copyright ©2004 Journal of Economic Integration
ABSTRACT

The paper shows that in a reasonable production structure for a developing economy a brain drain of skilled labour may raise the welfare of the economy while an emigration of unskilled labour is welfare reducing. Also an emigration of skilled/unskilled labour lowers the urban unemployment of unskilled labour and widens the skilled-unskilled wage-gap. The paper provides an alternative explanation for the increasing wage inequality in many less developed countries in the regime of liberalized trade and investment in terms of higher international mobility of skilled and unskilled labour during this period using a Harris-Todaro (1970) framework where the central principle of the Stolper-Samuelson theorem holds.

JEL Classification: F2, F20, F22

Keywords: skilled labour | unskilled labour | emigration of labour | welfare | urban unemployment | skilled-unskilled wage gap
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