Why do rich countries prefer free trade over free migration? the role of the modern welfare state
Wellisch, D.; Walz, U.
European Economic Review 42(8): 1,595-1,612
1998
ISSN/ISBN: 0014-2921 PMID: 12321972 Document Number: 280236
"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."