International factor mobility and production technology

This paper systematically investigates the pattern and effect of international factor mobility caused by international differences of production technology in an endogenous-population-growth and overlapping-generations model. It is shown here that if the autarkic steady state in each country is characterized by under-investment relative to the Golden Rule, international labor migration will take place to the country with a more capital-saving or neutrally superior technology, and then the capital-labor ratio and the demand for children per family in that country will be lower. On the other hand, international capital will move to the country with a more labor-saving or a neutrally superior technology and will decrease the per worker domestic capital stock in that country.