The simple analytics of optimal growth with migration

Abstract

This paper investigates the economic consequences of migration in the Ramsey-type dynamic optimizing context. In contrast to Hazari and Agro (J Econ Dyn Control 28:141–151, 2003) conclusions, we show that migration unambiguously reduces the per-capita domestic consumption growth, whereas necessarily raises the long-run per-capita consumption of domestic residents when production is “sufficiently” reactive to capital changes. Our findings are consistent with several empirical studies and simulation analyses, suggesting that changes in technological adjustment in response to migrants inflows may take some years to translate into productivity, generating some crowding out effects. The gains for natives are likely to materialize in the long run when the specialization of natives adjusts, firms invest in capital and adopt appropriate technologies.