Skill Transferability and Migration: A Theoretical Analysis of Skilled Migration Under Frictional Skill Transfer

Abstract

ABSTRACTIn this study, we analyze how skill transferability from an origin country to a destination country characterized by lower productivity, affects skilled worker migration, by using a multi-country new economic geography model proposed by Gasper et al. (2018). Specifically, we explain how countries that are less frictional in terms of skill transfer attract more high-skilled international migrants. The analysis, which is based on asymmetric skill transferability among countries that can be divided into two groups – those with smooth skill transferability for migrants and those with less smooth skill transferability – finds that countries with smooth skill transferability are more likely to be the industrial core attracting all skilled workers. We also find that lower frictional migration costs from a country with less smooth skill transferability to a country with smooth skill transferability always accelerates industrial agglomeration in the smooth skill transferability core country, while lower frictional migration costs between smooth skill transferability countries does not necessarily accelerate industrial agglomeration in a country with smooth skill transferability due to market crowding effects.