Skilled Worker Migration and Trade: Inequality and Welfare


  • We would like to thank participants at the ETSG (Warsaw, 2008) and the Bank of England-MMF-GEP Macroeconomics and International Migration Conference (London 2010) for helpful comments and suggestions. We also acknowledge financial support from the Leverhulme Trust under Programme Grant F/00/114/AM.


We develop a two-sector, two-country model where trade is driven by technological differences. Each country is populated by large number of heterogeneous workers distinguished by their level of skills. Given that one country has a technological advantage in the skilled intensive good when we allow for both trade and migration skilled workers migrate to that country. We analyse the consequences of this migration for both inequality and welfare for the source and the host country.