Dynamics, welfare and migration in open economies

Abstract

In this work we analyze the importance of dynamics in the determination of the distribution of gains from free trade and migration. Given a transition dynamic, free trade might worsen a country relatively to autarchy. Moreover, some individuals might lose welfare during the transition dynamics. In both case, individuals find incentives to migrating, given the lost in the welfare relatively to the autarchy; given the lost in welfare relatively to another country; or, given the intertemporal lost in welfare. Then, inequalities in the distribution of the benefits from free trade matters. Finally, we find out that population size and specialization in production matters in the determination of the distribution of gains from free trade and migration.