International Migration of Skilled Labour, Welfare and Unemployment of Unskilled Labour: A Note

Abstract

The present paper makes an attempt to examine theoretically the impact of emigration of skilled labour from developing countries on the level of welfare of the non-migrants and the level of urban unemployment of unskilled labour in a three sector Harris-Todaro model. The analysis suggests that in a reasonable production structure for a developing economy a brain drain of skilled labour raises urban unemployment of unskilled labour. The paper also shows that an emigration of skilled labour may raise the welfare of the non-migrants in a tariff-distorted economy if it imports the specialized manufacturing product or the labour-intensive good. However, if the economy imports the traditional manufacturing product, the welfare of the non-emigrating workers is likely to deteriorate.

Keywords: Emigration of skilled labour, unskilled labour, Harris-Todaro framework, welfare of the non-migrants, urban unemployment

JEL Classification: F2, F00, F22, J64