Internal Labor Movement and International Labor Movement

In this paper, we deal with internal and international labor movements in a two-country macroeconomic model where labor supply flow is affected by real consumption wage differentials. To investigate the effects of internal labor movement on international labor movement, we assume that each country has primary and secondary labor markets, internal movement occurs between the primary and secondary labor markets, and new and displaced workers enter and exit the labor markets of both countries. We show that internal labor movement causes workers to move internationally between secondary labor markets. We are able to determine the direction of international labor movement by observing the number of new workers entering secondary labor markets in each country. If a country has more new entrants into its secondary labor market than another country, secondary labor market workers of that country will move to the other country. However, we are not able to determine the direction of international labor movement by observing new workers entering the primary labor markets or labor movement between primary and secondary markets