GEP Research Paper 09/20
Emigration, Wage Inequality and Vanishing Sectors
Sugata Marjit and Saibal Kar
Summary
We investigate effects of labor emigration from developing countries on wage inequality and finite changes in production. Rise / fall in wage inequality critically hinges on direction of finite changes.
Abstract
Emigration leads to finite changes in structure of production and sectors vanish because they cannot pay higher wages. Does emigration of one type of labour hurt the other non-emigrating type in this set up? We demonstrate various scenarios when real income of the emigrating and the non-emigrating type do not move together and in the process generalize some of the existing results in the literature. In particular emigration can lead to a drastic change in the degree of inequality depending on which sectors survive in the post-emigration scenario.
Issued in September 2009
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