Immigration policy and counterterrorism

In a developing country, terrorists recruit and allocate their capital, skilled labor, and unskilled labor between domestic and foreign targets. Domestic targets require less skilled labor than foreign targets. Under various strategic scenarios, we show how countermeasures against the different terrorist inputs alter the amount and mix of targets, as well as how skilled and unskilled immigration quotas by a targeted foreign country affect this mix of attacks. We find that increases in skilled labor quotas generally reduce terrorist attacks in the foreign country, especially when the terrorists reside in a skill-scarce country. A number of different strategic scenarios, including leader–follower, are investigated.