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Monitoring, endogenous comparative advantage, and immigration

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  • Dhimitri Qirjo

Abstract

We propose a theory of free movement of goods and labor between two economies in the presence of moral hazard. Each country produces two final goods where the productive efforts of workers cannot be perfectly observed, or verified only in the complex industry. We show that national institutional quality and the system of the early childhood care and education determine the pattern of international trade. However, individuals’ decisions to emigrate depend only on the national institutional quality, where the country with more developed institutions serves as the host country of immigrants. We conclude that international labor movement promotes international trade. JEL classification: B52, I21, F10, F16, F22, J24. Copyright Qirjo. 2015

Suggested Citation

  • Dhimitri Qirjo, 2015. "Monitoring, endogenous comparative advantage, and immigration," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-22, December.
    • Handle: RePEc:spr:izamig:v:4:y:2015:i:1:p:1-22:10.1186/s40176-015-0047-6
    DOI: 10.1186/s40176-015-0047-6
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    References listed on IDEAS

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    Cited by:

    1. Qirjo Dhimitri, 2016. "Love of Variety and Immigration," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 901-930, April.

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    More about this item

    Keywords

    Comparative advantage; Occupational choice; Education; Institutions; Immigration; Moral hazard; Organization of production;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • F10 - International Economics - - Trade - - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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