International Migration and Growth in Developed Countries: A Theoretical Analysis

We use a two‐country version of the quality ladders endogenous growth model and show that free international migration raises world growth if it is driven by imbalances in labour supplies. International migration may, however, lower growth if it is induced by policy differences across, countries. Moreover, other things being equal, workers want to migrate to less populated countries, to countries that subsidize R&D less, to countries with lower tariffs, and to countries with wealthier consumers. Neither structural nor public policy differences generate any differences in growth rates across countries when tariffs are set at non‐prohibitively high levels.