The impact of differences in the levels of technology on international labor migration

In this paper we analyze the patterns of international labor migration in a two-country world where one country's production technology is superior to that of the other country. We exploit an overlapping-generations model which enables us to trace the relevant dynamic considerations. We find that in the absence of international capital movements labor will migrate from the technologically-inferior to the technologically-superior country unless the stationary autarkic equilibrium is characterized by over-investment relative to the Golden Rule and the long-run elasticity of the interest rate with respect to the technological level is sufficiently large, in which case migration will be from the technologically-superior country.