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Free labor mobility and indeterminacy in models of neoclassical growth

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  • Carmelo Pierpaolo Parello

    (Sapienza University)

Abstract

This paper establishes the conditions under which indeterminacy can occur in a Neoclassical growth model with international labor mobility. In the model, workers are supposed to move freely across countries without restrictions, and according to a Harris–Todaro mechanism that makes migration flows sensitive to differences among labor markets conditions. The paper shows that indeterminacy requires the marginal returns to immigrant labor to be diminishing, and no need for productivity externalities at a social level. It also shows that immigration quotas can serve it well to eliminate indeterminacy and stabilize final output.

Suggested Citation

  • Carmelo Pierpaolo Parello, 2021. "Free labor mobility and indeterminacy in models of neoclassical growth," Journal of Economics, Springer, vol. 133(1), pages 27-46, June.
    • Handle: RePEc:kap:jeczfn:v:133:y:2021:i:1:d:10.1007_s00712-020-00728-2
    DOI: 10.1007/s00712-020-00728-2
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    2. Parello, Carmelo Pierpaolo & Ikhenaode, Bright Isaac, 2021. "Migration, community networks and welfare in neoclassical growth models," Journal of Macroeconomics, Elsevier, vol. 70(C).

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    More about this item

    Keywords

    Indeterminacy; Free labor mobility; Temporary migration; Ramsey-like growth;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • F1 - International Economics - - Trade
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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