TITLE:
A Pure Capital Market Complementarity between Immigrants and Natives
AUTHORS:
Adolfo Cristóbal Campoamor
KEYWORDS:
Rural-Urban Migration, Investment Costs, Loanable Funds
JOURNAL NAME:
Modern Economy,
Vol.6 No.12,
December
21,
2015
ABSTRACT: This work presents a
model aiming to evaluate the impact of rural-urban migration on the aggregate
stock of loanable funds and investment by the urban population. Much higher
investment costs for immigrants in cities prevent their acquisition of either
human or physical capital. That is the reason why immigrants self-select as net
lenders and affect urban labor earnings by means of the availability of new
loanable funds for investment. This reduces the local interest rates and facilitates
urban aggregate investment, especially by the new generations of natives. As a
result of that, the aggregate labor income of natives increases unambiguously
with the size of new immigration waves.