Impact of Trade Liberalization on International Movement of Labor Using Global Trade Analysis Project: Revisiting Mundell’s Theorem in Iran

Document Type : Original Article

Authors

1 Ph.D Candidate in International Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

2 Assistance Professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

3 Associate Professor of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

4 Associate Professor of Economics, Faculty of Management and Economics, Shahid Bahonar University, Kerman, Iran, Mashhad, Iran

Abstract

Increasing economic integrity and expansion of trade across countries have caused international movement of production factors in order to achieve higher income. According to Mundell's theory and based on traditional theories of trade, unequal and different endowment of factors of production in countries cause the establishment of trade and the movement of factors. The present study investigates the effect of trade liberalization on the international movement of skilled and unskilled labor in Iran. Accordingly, trade liberalization is stimulated through four scenarios of import tariffs reduction of 5%, 10%, 25% and 50% in agricultural, industrial and the whole imported goods by using Global Trade Analysis Project. The findings of this research indicate the increase in migration due to the trade liberalization of industrial and all imported goods with the mobility of skilled and unskilled labor, verifying the complementary relationship. However, trade liberalization in the agricultural sector and skilled labor mobility are a complement, they are substitutes in terms of the unskilled labor movement. Considering the findings, liberalization in capital and intermediate goods and more restriction in consumption imported goods is suggested.

Keywords

References

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