Friday, July 6, 2007

Immigration and the Race to the Top

. Friday, July 6, 2007

The IHT has an interesting piece on labor mobility in Europe. Seems that the central and east European economies are losing skilled labor to western European countries. The solution? Policies that encourage skilled workers to move from points further east (e.g., Ukraine, Belarus, etc.).

While the article has a somewhat gloomy tone (highlighting the potential negative impact of labor scarcity on foreign investment), one might also point out that when supply is less than demand, price for the factor in short supply will rise. Hence, emergent labor shortages should produce rising real wages for skilled workers. Shouldn't this be good news?

By the same logic, why does the contemporary U.S. debate on immigration neglect supply, demand, and real wages? Is it reasonable to think that all Mexicans (Latinos more broadly) would move to the U.S. if they could? Wouldn't a mass migration increase the real wage in Mexico, thereby encouraging a reversal of labor flows?

If anybody can point me to a relevant academic literature on this question, please leave a comment.


Immigration and the Race to the Top
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