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GTAP Resource #4214

"Imperfect labour mobility in a CGE model: Does factor specific productivity matter?"
by Flaig, Dorothee, Harald Grethe and Scott McDonald

CGE models usually make extreme assumptions about labour mobility: labour is either perfectly mobile between sectors or fixed to a sector. With perfect mobility of labour, simulations lead to reallocation of labour among different sectors of the economy which can vary strongly in labour productivity; reflecting the fact that labour of a specific type may not be homogenous. When labour moves from less to more productive sectors an economy experiences a de facto increase in labour endowments. Separating the impacts of implicit increases in labour endowments from other impacts arising from labour reallocation is therefore important for result interpretation. For this purpose this study uses a CGE model in which labour reallocation is imperfect with a migration function governing the movement between sectors as precondition to allow for factor specific productivity. Two scenarios are run in order to estimate size and relevance of the productivity, or factor endowment, effect: the first causing movement from less productive to more productive industries, the second scenario induces movement of labour from productive sectors to less productive industries.

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Flaig, D. (4/15/2013)
Updated: Flaig, D. (6/14/2013)
Visits: 2,221
- Economic growth
- Labor market issues
- Migration
- Middle East

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