Flows of people, flows of ideas, and the inequality of nations

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt

The present paper examines a neglected determinant of aggregate productivity: temporary cross-border flows of people. We hypothesize that interaction between people from different nations facilitates the international diffusion of ideas, thus stimulating aggregate productivity. In order to assess the causal impact of people flows on productivity, we construct an instrument for people flows. By analogy to the trade/growth literature, this instrument is derived from a fitted gravity equation involving geographic determinants of bilateral travel flows. Our cross-section analysis reveal that greater international interaction leads to higher productivity; a very similar result, qualitatively as well as quantitatively, is obtained when we employ dynamic panel data methods for the purpose of identification.
TidsskriftJournal of Economic Growth
Udgave nummer1
Sider (fra-til)1-32
Antal sider32
StatusUdgivet - 2011

Bibliografisk note

JEL Classification: O33, O47, C21

ID: 32436259