1.

The question to be investigated and why it is meaningful:

 The question in this study is investigated is “What is the effect of migration and trade on
per capita income?

Or

 What is the impact of migration and trade on per person income?

Rationale: Build predictors of openness to immigration and to trade for each country by using
information on bilateral geographical and cultural distance.

 Geography may affect income through other channels.

 Institutions and early development also have a role in personal income growth.

 Instrumental variables estimates provides evidence of robust, positive effect of openness

to immigrations on long-run per capita income.

 Immigration also increases total factor productivity through diversity in productive skill
and higher rate of innovations.

2. Assumption:
The assumption of this paper is that migration with other control variables such as geographical
and cultural distance plays a significant role in per person income.

3. Data set used:

The data set used in this paper is about 147 countries around the world. This is cross section
analysis.

4. The theoretic Model:

Following are the main variables of this study:

i. Income per capita

ii. Trade share of GDP
iii. Migration share of population
iv. Country size
v. Distance between countries
vi. Population
 vii. Dummy for common border sharing
viii. Dummy for landlocked countries
ix. Dummy for common language
x. Country size

5. The empirical method:

The regression model used in the paper is given below:

6. The summary of the results:

Results Summary:
1. Predictor for the immigrant share perform better than predictor for trade share.

2. Estimated results of 2SLS shows that the share of immigrants in the population has a
significant and robust effect on long-run income per capita.

3. Effect of trade openness is not robust.

4. Immigrants enhance the total factor productivity which further leads to increase in per
capita income.

5. Migration further causes to diversification of skills and innovations.

7. The contribution and limitation of the paper and the possible extension
you can make:
The main limitation and possible extension to this article is that the current article is not meant to
be comprehensive assessment of the welfare effects derived from the migration. For this objective
we need addition pieces of information need to be examined further about the effect of migration
on per capita income in selected countries.

8. Publication Information
Authors: Francesc Ortega, Giovanni Peri

Source: Journal of International Economics, 92 (2014) 231-251.