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Factor Mobility and Income Growth: Two Convergence Hypotheses
Author(s) -
Razin Assaf,
Yuen ChiWa
Publication year - 1997
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00012
Subject(s) - economics , externality , human capital , convergence (economics) , per capita income , context (archaeology) , capital (architecture) , per capita , labour economics , labor mobility , demographic economics , macroeconomics , microeconomics , economic growth , geography , population , demography , archaeology , sociology
While technologies and policy fundamentals are presumably different internationally, inducing differences in growth rates, capital mobility can be a powerful force in equalizing output growth rates across countries. The paper provides some indirect evidence in support of this effect. In the context of regional growth, however, labor mobility can potentially equalize income levels across regions in the presence of human capital externalities. Supporting evidence is found for this effect, revealing that restrictions on labor flows tend to make per capita incomes more divergent across nations and/or regions.