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Workers without Borders? Culture, Migration and the Political Limits to Globalization

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  • Sanjay Jain
  • Sumon Majumdar
  • Sharun Mukand

Abstract

This paper examines the role of cultural factors in driving the politics and shape of migration policy. We show that there exists a broad political failure that results in inefficiently high barriers restricting the import of temporary foreign workers and also admitting an inefficiently large number of permanent migrants, but not enough to fill any labor shortage in the economy. We show that countries that are poor at cultural assimilation are better positioned to take advantage of short-term foreign worker programs than more culturally diverse and tolerant countries. A striking implication is that relaxing restrictions on the mobility of migrant workers across employers has the potential to raise host country welfare even though it increases migrant wages and lowers individual firm’s profits. We also demonstrate the existence of multiple equilibria: some countries have mostly temporary migration programs and see a low degree of cultural assimilation by the migrants, while other countries rely more on permanent migrants and see much more assimilation.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2954.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_2954

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Keywords: international migration; political economy; culture; assimilation; temporary workers;

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  1. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  2. David Card & Christian Dustmann & Ian Preston, 2009. "Immigration, Wages, and Compositional Amenities," CReAM Discussion Paper Series 0929, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  3. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, American Economic Association, vol. 89(5), pages 1327-1336, December.
  4. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1027-56, November.
  5. Assaf Razin & Effraim Sadka & Phillip Swagel, 1998. "Tax Burden and Migration: A Political Economy Theory and Evidence," NBER Working Papers 6734, National Bureau of Economic Research, Inc.
  6. Walmsley, Terri Louise & Winters, L. Alan, 2003. "Relaxing the Restrictions on the Temporary Movements of Natural Persons: A Simulation Analysis," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3719, C.E.P.R. Discussion Papers.
  7. Gianmarco I.P. Ottaviano & Giovanni Peri, 2008. "Immigration and National Wages: Clarifying the Theory and the Empirics," NBER Working Papers 14188, National Bureau of Economic Research, Inc.
  8. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(S6), pages S95-S126, December.
  9. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, American Economic Association, vol. 88(1), pages 139-56, March.
  10. István Kónya, 2007. "Optimal Immigration and Cultural Assimilation," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 25, pages 367-391.
  11. Facchini, Giovanni & Mayda, Anna Maria, 2006. "Individual Attitudes towards Immigrants: Welfare-State Determinants Across Countries," IZA Discussion Papers 2127, Institute for the Study of Labor (IZA).
  12. Jim Dolmas & Gregory W. Huffman, 1998. "On the political economy of immigration and income redistribution," Working Papers, Federal Reserve Bank of Dallas 9804, Federal Reserve Bank of Dallas.
  13. Christian Dustmann, 1996. "Temporary Migration, Human capital and Language Fluency of Migrants," Discussion Papers, University College London, Department of Economics 96-21 ISSN 1350-6722, University College London, Department of Economics.
  14. Richard B. Freeman, 2006. "People Flows in Globalization," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 20(2), pages 145-170, Spring.
  15. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(3), pages 55-74, Summer.
  16. Geoffrey Carliner, 1995. "The Language Ability of U.S. Immigrants: Assimilation and Cohort Effects," NBER Working Papers 5222, National Bureau of Economic Research, Inc.
  17. Williamson, Jeffrey G., 1996. "Globalization, Convergence, and History," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 56(02), pages 277-306, June.
  18. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(2), pages 3-22, Spring.
  19. Klein, Paul & Ventura, Gustavo, 2009. "Productivity differences and the dynamic effects of labor movements," Journal of Monetary Economics, Elsevier, Elsevier, vol. 56(8), pages 1059-1073, November.
  20. Bauer, Thomas K. & Lofstrom, Magnus & Zimmermann, Klaus F., 2000. "Immigration Policy, Assimilation of Immigrants and Natives' Sentiments towards Immigrants: Evidence from 12 OECD-Countries," IZA Discussion Papers 187, Institute for the Study of Labor (IZA).
  21. Gordon H. Hanson, 2008. "The Economic Consequences of the International Migration of Labor," NBER Working Papers 14490, National Bureau of Economic Research, Inc.
  22. Facchini, Giovanni & Willmann, Gerald, 2005. "The political economy of international factor mobility," Journal of International Economics, Elsevier, Elsevier, vol. 67(1), pages 201-219, September.
  23. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2008. "Wages, Unemployment and Inequality with Heterogeneous Firms and Workers," NBER Working Papers 14122, National Bureau of Economic Research, Inc.
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