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A Small Open Economy Analysis of Migration

Author

Listed:
  • Karnit Flug

    (Bank of Israel)

  • Zvi Hercowitz

    (Tel­ Aviv University, Bank of Israel)

  • Anat Levi

    (Bank of Israel)

Abstract

The standard small-open-economy framework is extended to incorporate migration and job search. The model has a dynamic optimization setup with migration costs, where a simple mechanism of job search interacts with the migration decision. The balanced-growth population size is undetermined in this model. However, when conditioned on the current population size, the expected long-run population is finite. The developed framework is used to analyze, both theoretically and quantitatively, the effects of the ongoing immigration influx to Israel from the C.I.S., treated as exogenous. The outcome of the model is a set of paths for endogenous emigration, domestic population size, and unemployment.

Suggested Citation

  • Karnit Flug & Zvi Hercowitz & Anat Levi, 1994. "A Small Open Economy Analysis of Migration," Bank of Israel Working Papers 1994.04, Bank of Israel.
    • Handle: RePEc:boi:wpaper:1994.04
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    References listed on IDEAS

    as
    1. Chiswick, Carmel U. & Chiswick, Barry R. & Karras, Georgios, 1992. "The impact of immigrants on the macroeconomy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 37(1), pages 279-316, December.
    2. Hercowitz, Zvi & Pines, David, 1991. "Migration with fiscal externalities," Journal of Public Economics, Elsevier, vol. 46(2), pages 163-180, November.
    3. Galor, Oded, 1986. "Time preference and international labor migration," Journal of Economic Theory, Elsevier, vol. 38(1), pages 1-20, February.
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