Time preference and labour migration in an OLG model with land and capital

This paper constructs a two-country migration model in the lines of Galor (1986), in which the world population consists of individuals of two types who have different time preferences. Production uses three inputs: mobile labour, immobile capital and land. It is shown that both countries are necessarily inhabited by agents of both types and exhibit equal density of population and equal interest rate at the steady state equilibrium of the integrated economy. The steady state welfare implications of international labour migration are studied.This paper has been written during Philippe Michel's visit at CORE, September 1994. Earlier drafts of this paper have been presented at the meeting Journées d'étude générations imbriquées (Marseille, November 24–26, 1994), at the ESPE conference (Lisbon, June 1–3, 1995) and at the EEA annual meeting (Prag, September 1–3, 1995). Comments by participants are gratefully acknowledged. We are also grateful to Stéphane Déo, Kamhon Kan, Pierre Pestieau, Christoph Schmidt and two anonymous referees for helpful comments. The usual disclaimer applies.Responsible editor: Alessandro Cigno