Out-Migration, Unemployment, Income and Structural Change: A Trade Theoretic Analysis
On the basis of the model presented in chapter two we now analyse the impact of temporary skilled out-migration on urban unemployment, the relative price of urban and rural non-traded goods, the real rewards of the factors of production, and welfare in each region in the source country. These migrant workers can be a large proportion of the labour force both in the source and the host country. For example, foreign workers from neighbouring Arab states and from Asian countries as a percentage of the total labour force constituted 44 per cent in Saudi Arabia to 89 per cent in the United Arab Emirates. Given the significance of this phenomenon it is important to study its economic effects. We shall confine ourselves to analysing the impact of emigration in the source country only.
KeywordsReal Exchange Rate Skilled Worker Relative Price Urban Region Skilled Labour
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- 1.See, for example, Altonji and Card (1991), Bhagwati and Rodriguez (1975), Kuhn and Wooton (1991), Quibria (1986) Thompson (1984), Djajic (1986) and Rodriguez (1975).Google Scholar
- 2.Rivera-Batiz (1982) correctly observed “that a substantial fraction of those workers emigrating out of less-developed countries do move out of such sectors as services, construction, transportation, etcetera, sectors which produce non-traded commodities” page 87.Google Scholar
- 3.A similar result can be found in Rivera-Batiz (1982, 1984) and Thompson (1984).Google Scholar
- 4.The Dutch Disease refers to the phenomenon of an export boom resulting in an appreciation of the exchange rate and its consequences on the composition of output (structural adjustment).Google Scholar
- 5.The assumption of L SU as a specific factor that partly migrates overseas can also be viewed as a depletable resource part of which is lost every year. Thus this model can be used for examining the use of depletable resources on employment and other variables in a distortionary framework.Google Scholar