(2001) assumes that if developed countries increased their labor force by 5 percent, with the additional workers coming from developing countries, and the migrants made up just a quarter of the wage gap between the two nations, then the global welfare gain would be $300bn at 1997 prices.

The magnitudes of the impacts vary due to the specific assumptions related to a given analysis. Walmsley, Winters, and Ahmed (2011) applies a comparative static simulation model to account for specific migration corridors and bilateral wage differentials and consider a similar exercise where a 3 percent increase in Northern labor supply was met with migrants coming from the South, increasing global GDP by US$ 288 billion. Moving to a dynamic framework that accounted for mechanisms like capital accumulation, World Bank (2006) suggests that if the labor forces of developed countries grew by 3 percent due to a gradual increase in migration over a 10-year period, then the global real income gain could be around US$ 674 billion.

Following the literature, a global dynamic economic simulation approach underpins the analyses in this paper. A simulation approach is taken in this and the other studies for a few reasons. A major reason is that the global labor markets are all affected simultaneously due to international migration and thus must all be solved in global general equilibrium for a comprehensive understanding of all the channels of impact. Labor of different skill levels and national origin have varying marginal productivities. So, understanding the impact of a change in the composition of a labor force due to changes in migrant stock is not easily possible through a purely theoretical approach since there are effectively multiple labor markets that must reach equilibrium and general equilibrium effects in the economy that must be accounted for. Also, wage-differentials between bilateral migration corridors vary, and income gain from greater migration flows needs to account for wage changes in both the sending and receiving countries, as well as the characteristics of natives, old migrants from different countries, and new migrants from different countries. For these reasons, a computational approach is a practical way to determine impacts.

The approach compares two what-if counterfactual simulations with distinct migration shocks to a common baseline scenario. Since both the baseline and the alternative simulations contain the same underlying economic projections and assumptions, their differences isolate the global and dynamic effects of the critical factor – the migration interventions – in terms of deviations from the baseline scenario and its underlying numbers. In addition to the global interactions of labor and commodity markets, the resulting evolution of relative factor prices (among other factors) will have repercussions on future resource allocation and capital accumulation, with significant consequences for the dynamic pattern of labor incomes in both migrant-receiving and -sending countries.

# **2.1.Model**

The simulation approach of this paper uses a modified and updated version of the LINKAGE recursive dynamic computable general equilibrium (CGE) model of van der Mensbrugghe (2011, 4