International Labor Movements and Trade

Lifting barriers to labor mobility across countries is controversial. Although the Japanese government is attempting to increase the number of skilled immigrants while curbing unskilled immigrants, immigration policy has been a contentiously debated issue in Japan from the perspectives of labor scarcity due to low fertility, industry competition, and the current demand for unskilled immigrant workers in Japan. This paper selectively discusses the recent research on international migration, emphasizing interactions with international trade and offshoring. Recent studies indicate that, given large productivity disparities across countries, liberalizing international migration yields much greater gains than pursuing further liberalization in trade or international capital transactions. Examining international labor movements and trade within unified frameworks reveals new insights into the consequences of international migration from the perspectives of terms of trade, scale economy, and task specialization. As for economic growth, empirical studies suggest that skilled immigrants will accelerate research and development (R&D), which may lead to increases in economic growth. However, it is still uncertain whether a higher economic growth rate owing to immigration will improve per capita welfare. Further empirical analyses are needed to gauge the empirical relevance on theoretical implications about international migration under free trade. Another promising research area is the political economy of international migration in which trade policy and migration policy are simultaneously determined.