DP1684 | Trade and Migration: A Production-Theory Approach


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This paper integrates the production-theory approach to import determination and the production-theory approach to immigration. The aggregate technology is described by a four-input translog cost function, from which the demand for imports and the demand for foreign labour services can be jointly derived. Empirical estimates are reported for Switzerland. Special care is taken to describe the substitution and complementarity relationships between the four inputs under alternative hypotheses. The issue of flexibility with respect to time is also examined.