Abstract
This paper analyzes the pattern and welfare implications of international labor migration within a dynamic general equilibrium model. In a two-country overlapping generations world, labor migrates unilaterally from the high (low) to the low (high) time preference country if both countries under (over) invest relative to the Golden Rule. Bilateral migration, a theoretical novelty, occurs if the countries are on opposite sides of the Golden Rule. Steady-state welfare analysis is conducted, where, in contrast to existing results, unilateral migration immiserizes non-migrants in the immigration country while making non-migrants in the immigration country at least as well off. Bilateral migration may improve world welfare.
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