The effects of migration and pollution on cognitive skills in Caribbean economies: a theoretical analysis

Abstract

AbstractThis work examines the interaction between demographic features and environmental constraints in Caribbean small island developing states. Specifically, it aims to clarify human capital dynamics when migration and environmental quality matter. To do so, two main ingredients are introduced in an overlapping generations model: countries may benefit from migration through a brain gain or remittances, and production emits pollution that hinders the accumulation of human capital. Two cases emerge from the analysis. In the first case, an environmental policy is sufficient to correct the externality, and migration should stay at a relatively low level. In the second case, if pollution emissions are high relative to the effectiveness of environmental policy, migration leads to an increase in per capita output and human capital. This only happens if the emigration rate is already high, because it leads to a reduction in demographic pressure on the environment.