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Why do rich countries prefer free trade over free migration? The role of the modern welfare state.

Why do rich countries prefer free trade over free migration? The role of the modern welfare state. "According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers." http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European economic review Pubmed

Why do rich countries prefer free trade over free migration? The role of the modern welfare state.

European economic review , Volume 42 (8): 18 – May 5, 1999

Why do rich countries prefer free trade over free migration? The role of the modern welfare state.


Abstract

"According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers."

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ISSN
0014-2921
pmid
12321972

Abstract

"According to traditional trade theory (Heckscher-Ohlin), free trade and free migration are equivalent measures of economic integration leading both to an equalization of factor prices. This prediction is in sharp opposition to the observed preference of rich countries for free trade over free migration. We provide an explanation for this inconsistency: the redistribution policies in the countries. Social welfare in countries with a relatively small number of low-skilled native workers is higher with free trade than with free migration due to redistribution of income towards immigrating workers."

Journal

European economic reviewPubmed

Published: May 5, 1999

There are no references for this article.