International Labor Mobility and the Demand for Imports

This paper examines the contribution of nonresident workers to Swiss production possibilities in an open-economy setting. The analysis is based on the GNP function approach to modeling the demand for imports and it treats foreign labor services and imports as two of several inputs to the technology. The model not only allows for the detection of substitution and complementarity relationships between foreign labor and domestic factors of production, but it also makes it possible to analyze the link between international labor mobility and the demand for imports.