Inducing human capital formation: Migration as a substitute for subsidies

Arbeitspapier

When productivity is fostered by an individual's own human capital as well as by the economy-wide average level of human capital, individuals under-invest in human capital. The provision of subsidies for the formation of human capital, conditional on the subsidy being self-financed by tax revenues, can bring the economy to its socially optimal level of human capital. Yet a strictly positive probability of migration to a richer country, by raising both the level of human capital formed by optimizing individuals in the home country and the average level of human capital of non-migrants in the country, can enhance welfare and nudge the economy toward the social optimum. Indeed, under a well-controlled, restrictive migration policy the welfare of all workers is higher than in the absence of this policy.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Reihe Ökonomie / Economics Series ; No. 100

Classification and Topics

• Classification: Wirtschaft ; International Migration ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Welfare, Well-Being, and Poverty: General ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Geographic Labor Mobility; Immigrant Workers
• Subject: migration ; human capital formation ; externalities ; social welfare ; Humankapital ; Internationale Arbeitsmobilität ; Externer Effekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stark, Oded ; Wang, Yong
• Event: Veröffentlichung
• (who): Institute for Advanced Studies (IHS)
• (where): Vienna
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/71203
• Last update: 10.03.2025, 11:45 AM CET