People Flows in Globalization

Richard B. Freeman

NBER Working Paper No. 12315
Issued in June 2006
NBER Program(s):International Trade and Investment, Labor Studies

People flows refers to the movement of people across international borders in the form of immigration, international student flows, business travel, and tourism. Despite its peripheral status in debates over globalization, the movement of people from low income to high income countries is fundamental in global economic development, with consequences for factor endowments, trade patterns, and transfer of technology. In part because people flows are smaller than trade and capital flows, the dispersion of pay for similarly skilled workers around the world exceeds the dispersion of the prices of goods and cost of capital. This suggests that policies that give workers in developing countries greater access to advanced country labor markets could raise global economic well-being considerably. The economic problem is that immigrants rather than citizens of immigrant-receiving countries benefit most from immigration. The paper considers "radically economic policies" such as auctioning immigration visas or charging sizeable fees and spending the funds on current residents to increase the economic incentive for advanced countries to accept greater immigration.

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Document Object Identifier (DOI): 10.3386/w12315

Published: Freeman, Richard B. "People Flows In Globalization," Journal of Economic Perspectives, 2006, v20(2,Spring), 145-170. citation courtesy of

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