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| Author: | Wellisch, D. Walz, U. |
| Title: | Why do rich countries prefer free trade over free migration ? The role of modern welfare state |
| Journal: | European Economic Review
1998 : SEP, VOL. 42:8, p. 1595-1612 |
| Index terms: | MIGRATION FREE TRADE POLICY ECONOMIC INTEGRATION SOCIAL WELFARE WORKERS |
| Language: | eng |
| Abstract: | According to traditional trade theory by 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 opposition to the observed preference of rich countries for free trade over free migration. In the paper, an explanation for this inconsistency; the redistribution policies in the countries is provided. 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. |
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