Working Paper: CEPR ID: DP3719
Authors: Terrie Louise Walmsley; L Alan Winters
Abstract: While the liberalization of trade has been at the forefront of the global agenda for many decades, the movement of natural persons remains heavily guarded. Nevertheless, restrictions on the movement of natural persons across regions impose a cost on developing and developed economies that far exceeds that of trade restrictions on goods. This Paper uses a global CGE model to investigate the extent of these costs, by examining the effects of an increase in developed countries? quotas on both skilled and unskilled temporary labour equivalent to 3% of their labour forces. The results confirm that restrictions on the movement of natural persons impose significant costs on nearly all countries (over $150 billion in all), and that those on unskilled labour are more burdensome than those on skilled labour.
Keywords: CGE; GATS; Mode 4; Temporary Migration
JEL Codes: F22; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increasing developed countries' quotas on skilled and unskilled temporary labour by 3% of their labour forces (F66) | Significant increase in world welfare (D69) |
| Increase in temporary labour supply (J69) | Increase in world welfare (D69) |
| Relaxing restrictions on unskilled labour (F66) | Widespread positive effects on production and real GDP in developed economies (F69) |
| Increase in remittance flows (F24) | Enhancement of local incomes in developing economies (O55) |
| Increasing developed countries' quotas on unskilled labour (F66) | Significant benefits for developing countries (F63) |
| Costs imposed by restrictions on natural persons exceed those of trade restrictions on goods (F69) | Total cost exceeding $150 billion (H69) |