Trade policy and international migration: substitutes or complements?
Schiff, M.
Development strategy, employment and migration insights from models: 23-41
1996
Document Number: 309381
Three scenarios are presented which lead to complementarity in the context of North-South (and East-West) migration and trade. Trade policy reform can be seen as a policy instrument to reduce migration, but it is argued that trade liberalization and migration may well be complements, at least in the short and medium terms. Hence trade policy reform may be an ineffective instrument to reduce immigration, and it may even result in an increase in the level of immigration. The chapter reviews the issue of the substitutability or complementarity between migration and trade in the trade literature, and then with the migration literature. Three plausible scenarios and models are presented to explain the complementarity between migration and trade: the first model incorporates migration costs and financial constraints into a migration model; the second demonstrates that under factor specificity, if skilled labour is used intensively in the protected sector, trade reform may lead to an increase in migration; and the third model takes into account the fact that the most protected sectors in a number of reforming LDCs are labour-intensive. The second and third models make use of the concept of social capital.