When productivity is fostered by an individual's own human capital as well as by the economy-wide average level of human capital, individuals under-invest in human capital. The provision of subsidies for the formation of human capital, conditional on the subsidy being self-financed by tax...

A theory is developed of labor migration that is prompted by a desire to avoid "social humiliation". In a general equilibrium framework it is shown that as long as migration can reduce humiliation sufficiently, migration will occur even between two identical economies. Migration increases the...