Essays on economic growth and migration

This work consists of several essays in economic growth, migration and the informal sector. Chapter 1 presents a simplified general equilibrium model of migration and growth useful to explore the interrelations between capital accumulation, convergence and imperfect human mobility. Regions or countries differ in a productive factor subject to a congestion externality. Its natural interpretation is as a local and rival public good. The model predicts transitional convergence even in the case of perfect capital mobility. The amount of human mobility turns out to be greater than the social optimum. As an application of the model, I consider the problem of spatial allocation of resources in the presence of local public goods. Chapter 2 studies growth, convergence and factor mobility in a system of economies where capital markets are integrated. Adjustment costs for capital can explain convergence if there is no labor migration. Costs of migration with or without adjustment costs for capital can also account for convergence. Migration tends to accelerate convergence, but this effect cannot be estimated from an expanded convergence equation that includes migration rates. The convergence speed is inversely related to the costs of mobility. The model is estimated in Chapter 3 for regional growth and migration in 5 European countries (Germany, Spain, Italy, France and the U.K.), Japan and the U.S. The results support the basic predictions of the model.;Chapter 4 analyses the informal sector. The presence of large informal sectors is one of the most important characteristics of developing countries. Socially inefficient governments create political and legal structures that discriminate between formal and informal sectors in order to extract monopoly rents from the goods they control. A dynamic model is built where the existence of the informal sector is an optimal response of utility maximizing agents to government-induced inefficiencies. The government is modelled as providing productive public services and composed of bureaucrats that maximize their own utility. The informal and formal sectors use the same productive technology, but the former do not pay taxes. Informals can use only a fraction of public services, are subject to stochastic fines and cannot use the capital markets. I explore the effects of the informal sector on the aggregate growth rate and social welfare.