Working Paper: CEPR ID: DP16214
Authors: Eran Yashiv
Abstract: This paper studies outcomes for workers moving from a poor to a rich economy employing a job tasks based approach. It uses a data case, whereby a worker could decide to work in a richer economy and place himself there by a daily or weekly commute. This set-up faciliates the disentanglement of income differences motives from a plethora of other motives. Thus it eschews the bias inherent in many studies.The paper emphasizes the idea that tasks are tied to locations, and workers choose a location-task-wage `pack.' The task demanded, which is a bundle of skills, constrains human capital returns for movers. Relatively low task returns generate a substantial offset to the productivity gain for migrants, stemming from the rich economy having higher TFP and capital.
Keywords: rich and poor economies; migrant tasks; location task wage bundle
JEL Codes: E24; F22; F66; J24; J31; J61; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher total factor productivity (TFP) and capital in the rich economy (O49) | Higher wages (J39) |
| Lower returns to human capital for movers (J62) | Reduced expected gains from migration (F22) |
| Higher total factor productivity (TFP) and capital in the rich economy (O49) | Reduced expected gains from migration (F22) |
| Self-selection on observables (C52) | Negative selection for movers (R23) |
| Observable skills of movers tend to be lower (J62) | Complicates understanding of wage differentials (J31) |
| Positive selection effect on unobserved skills (J24) | Complicates understanding of wage differentials (J31) |