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Is there too little immigration? An analysis of temporary skilled migration

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  • Subhayu Bandyopadhyay
  • Howard Wall

Abstract

This paper presents a model of legal migration of temporary skilled workers from one source country to two host countries, both of which can control their levels of such immigration. Because of complementarities between capital and labor, the return on capital is positively related to the level of immigration. Consequently, when capital is immobile, host nations' optimal levels of immigration are positively related to their capital endowments. Further, when capital is mobile between the host nations, the common return on capital is a function of the levels of immigration in both countries, meaning that immigration is a public good. As a result, when immigration imposes costs on host countries, the Nash equilibrium results in free riding and less immigration than would occur in the cooperative equilibrium. These results are qualitatively unaltered when capital mobility extends to the source nation.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/09638190701872616
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 17 (2008)
Issue (Month): 2 ()
Pages: 197-211

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Handle: RePEc:taf:jitecd:v:17:y:2008:i:2:p:197-211

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Related research

Keywords: skilled immigration; optimal immigration; capital mobility; externalities; public goods; assimilation costs;

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References

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  1. Richard B. Freeman, 2003. "Trade Wars: The Exaggerated Impact of Trade in Economic Debate," NBER Working Papers 10000, National Bureau of Economic Research, Inc.
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  4. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
  5. George J. Borjas, 2001. "Does Immigration Grease the Wheels of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 69-134.
  6. Ottaviano, Gianmarco Ireo Paolo & Peri, Giovanni, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the US," CEPR Discussion Papers 5226, C.E.P.R. Discussion Papers.
  7. Christian Dustmann & Arthur Van Soest, 2002. "Language and the earnings of immigrants," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(3), pages 473-492, April.
  8. Bandyopadhyay, Subhayu, 1996. "Growth, welfare and optimal trade taxes: a fallacy of composition," Journal of Development Economics, Elsevier, vol. 50(2), pages 369-380, August.
  9. Klaus F. Zimmermann, 2004. "European Labour Mobility: Challenges and Potentials," Discussion Papers of DIW Berlin 460, DIW Berlin, German Institute for Economic Research.
  10. Panagariya, Arvind & Schiff, Maurice, 1994. "Can revenue maximizing export taxes yield higher welfare than welfare maximizing export taxes?," Economics Letters, Elsevier, vol. 45(1), pages 79-84, May.
  11. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March.
  12. Bond, Eric W. & Chen, Tain-Jy, 1987. "The welfare effects of illegal immigration," Journal of International Economics, Elsevier, vol. 23(3-4), pages 315-328, November.
  13. Rodrik, Rani, 1995. "Trade and industrial policy reform," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 45, pages 2925-2982 Elsevier.
  14. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
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