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Title: |
Minimum Wage, International Migration and Their Effects on Welfare |
| Author: |
Basu, Bharati |
| Author
Affiliation: |
Central MI U |
| Source: |
International Economic Journal, Summer 1995, v. 9, no. 2, pp. 101-93 |
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Publication Date: |
Summer 1995 |
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Abstract: |
This paper evaluates migration policies
for an open economy in the presence of unemployment resulting from a
minimum wage. Migration between countries is triggered by an expected
wage differential which depends both on the market wage and the level of
unemployment. Workers therefore can move in either direction. The paper
shows that labor outflow raises employment and welfare.
Distortion-ridden free trade with this out-migration is therefore better
than distortion-ridden free trade with no migration. It might also be
better than autarky. Under the scenario, free migration is as
alternative to restricted trade often recommended to deal with this type
of distortion. Labor inflow on the other hand generates unfavorable
terms of trade, raises national and global unemployment, and reduces
welfare. |
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