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FDI, Infrastructure and the Welfare Effects of Labour Migration

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  • Barry, Frank

Abstract

A model of a small open economy with open capital and labour markets is presented. Labour demand is based on capital mobility and increasing returns in production. Migration decisions are based on the relative attractiveness of regions in terms of the stock of infrastructure, including its tax cost and the degree of congestion, and the level of wages prevailing. Equilibria are not Pareto-efficient because individuals do not take account of the impact of their actions on the level of wages prevailing, the extent of the tax base to finance infrastructural provision, or the degree of congestion. The model generates new insights into a range of policy issues that surfaced over the course of the recent Irish boom.

Suggested Citation

  • Barry, Frank, 2002. "FDI, Infrastructure and the Welfare Effects of Labour Migration," CEPR Discussion Papers 3380, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3380
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    Cited by:

    1. Barry, Frank, 2009. "Social Partnership, Competitiveness and Exit from Fiscal Crisis," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 1-14.
    2. Frank Barry, 2005. "Third-Level Education, Foreign Direct Investment and Economic Boom in Ireland," Working Papers 200509, School of Economics, University College Dublin.
    3. Buch, Claudia M. & Kleinert, Jörn & Toubal, Farid, 2003. "Where Enterprises Lead, People Follow? Links between Migration and German FDI," Kiel Working Papers 1190, Kiel Institute for the World Economy (IfW Kiel).
    4. Frank Barry, 2004. "Prospects for Ireland in an Enlarged EU," The World Economy, Wiley Blackwell, vol. 27(6), pages 829-852, June.
    5. Frank Barry & Michael B. Devereux, 2006. "A Theoretical Growth Model for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 37(2), pages 245-262.

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    More about this item

    Keywords

    Foreign direct investment;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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