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Journal of Economic Integration 2005 December;20(4) :688-726.
Relaxing the Restrictions on the Temporary Movement of Natural Persons: A Simulation Analysis

Terrie L. Walmsley L. Alan Winters 

Purdue University
World Bank
Copyright ©2005 Journal of Economic Integration

While the liberalisation of trade has been at the forefront of the global agenda for many decades, the movement of natural persons remains heavily guarded. Nevertheless restrictions on the movement of natural persons across regions impose a cost on developing and developed economies that far exceeds that of trade restrictions on goods. This paper uses a global CGE model to investigate the extent of these costs, by examining the effects of an increase in developed countries’ quotas on both skilled and unskilled temporary labour equivalent to 3% of their labour forces. The results confirm that restrictions on the movement of natural persons impose significant costs on nearly all countries (over $150 billion in all), and that those on unskilled labour are more burdensome than those on skilled labour.

JEL Classifications: FJ61, C68

Keywords: Applied general equilibrium modeling | Temporary Movement of natural persons | GATS Mode 4 | Skill | Welfare
1. Borjas, G. J. (1995), “The economic benefits from immigration”, Journal of Economic Perspectives, vol 9(2), pp. 3-22.
2. Borjas, G. J. (2000): Labour Economics, 2 Edition, McGraw-Hill, Boston.
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