Emigration and wages in an open economy: some evidence from Pakistan

"This paper examines the impact of labour emigration on the wages of both the skilled and unskilled workers....Using... Pakistani data, it is found that unskilled labour is used extremely intensively in the agriculture sector (exportable), skilled labour is used extremely intensively in the manufacturing sector (importable), and capital is used as the middle factor in both the traded goods sectors. Moreover, capital is used significantly less intensively in the construction (non-traded) sector relative to both the traded sectors.... The results suggest that the higher wages to both the skilled and unskilled workers must be compensated by a reduction in the rate of returns to capital if export-oriented and import-competing sectors in Pakistan are to remain internationally competitive."