Chapter 5 examines two interesting related issues: the first is the effect of trade liberalisation on international migration; the second is the effect of trade liberalisation on provision of public goods in different countries; the two effects are connected because the original contribution of this chapter is to analyse the effects of trade liberalisation on migration through the effects on provision of some public good.

The analysis is developed through a series of comparative static exercises with a general equilibrium model focusing on the production side of the economy and using duality theory. Although there are a number of analytical results, depending on assumptions on labour intensity of the importable good and on the degree of substitution between the importable and the public good, a general outcome seems to emerge from the whole analysis: this quite reasonable result being that trade liberalisation is likely to reduce immigration or increase emigration not only directly by reducing the labour marginal revenue, but also indirectly by reducing the tax revenue coming from trade restrictions, and hence by providing fewer funds to finance the provision of a public good which is assumed to have a positive effect on the labour marginal revenue. Hence the causal chain is from trade liberalisation to lower taxes to lower provision of public good to lower demand for labour.

A second interesting result more specifically concerns the relation between trade liberalisation and provision of public goods.