DP614 Human Capital, Investment and Migration in an Integrated Europe

Author(s): Michael C Burda, Charles Wyplosz
Publication Date: December 1991
Keyword(s): Aggregate Supply, Eastern Europe, Investment, Migration
JEL(s): 015, 052, F22, J61
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=614

The short- and longer-term regional consequences of migration for European aggregate supply are examined in a simple model in which human capital enters the production function externally. The planner chooses a reallocation of population across East and West that cannot be replicated by the market without taxes or subsidies. The market solution in this model with free migration is always associated with an efficiency loss and might lead to the `Mezzogiorno syndrome' in the East.