423. Emigration, Finite Changes and Wage Inequality

Sugata Marjit & Saibal Kar, School of Economics Discussion Paper No. 423, May 2010, School of Economics, The University of Queensland. Australia.

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Abstract

Emigration leads to finite changes in structure of production and sectors vanish because they cannot pay higher wages. Does emigration of one type of labor hurt the other non-emigrating type in this set up? We demonstrate various scenarios when real incomes of the emigrating and the non-emigrating types do not move together. This generalizes some of the existing results in the literature. In particular, emigration can lead to a drastic change in the degree of inequality depending on which of the sectors survive in the post-emigration regime.