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An Incentive Mechanism to Break the Low-skill Immigration Deadlock

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Author Info

  • David de la Croix

    ()
    (IRES and CORE, Universite catholique de Louvain)

  • Frederic Docquier

    ()
    (National Fund for Scientific Research (Belgium) and IRES, Universite catholique de Louvain)

Abstract

Although movements of capital, goods and services are growing in importance, workers movements are impeded by restrictive policies in rich countries. Such regulations carry substantial economic costs for developing countries, and prevent global inequality from declining. Even if rich countries are averse to global inequality, a single country lacks incentives to welcome additional migrants as it would bear the costs alone while the benefits accrue to all rich states. Aversion to global inequality confers a public good nature to the South-North migration of low-skill workers. We propose an alternative allocation of labor maximizing global welfare subject to the constraints that the rich countries are at least as well off as in the current "nationalist" (or "Nashionalist") situation. This "no regret" allocation can be decentralized by a tax-subsidy scheme which makes people internalize the fact that as soon as a rich country welcomes an additional migrant, global inequalities are reduced, and each citizen in the rich world is better off too. Our model is calibrated using statistics on immigration, working-age population and output. We simulate the proposed scheme on different sets of rich countries.

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Bibliographic Info

Paper provided by Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London in its series CReAM Discussion Paper Series with number 1008.

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Date of creation: May 2010
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Handle: RePEc:crm:wpaper:1008

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Keywords: Public Good; Inequality Aversion; Immigration policy;

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  1. Hatton, Timothy J. & Williamson, Jeffrey G, 2005. "Refugees, Asylum Seekers and Policy in Europe," CEPR Discussion Papers 5058, C.E.P.R. Discussion Papers.
  2. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
  3. Claus Aastrup Jensen & Nikolaj Malchow-M�ller & Jan Rose Skaksen, 2010. "Does coordination of immigration policies among destination countries increase immigration?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 19(3), pages 357-384.
  4. Stephen Drinkwater & Paul Levine & Emanuela Lotti & Joseph Pearlman, 2007. "The Immigration Surplus Revisited In A General Equilibrium Model With Endogenous Growth," Journal of Regional Science, Wiley Blackwell, vol. 47(3), pages 569-601.
  5. Holger Bonin & Bernd Raffelhüschen & Jan Walliser, 2000. "Can Immigration Alleviate the Demographic Burden?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(1), pages 1-, September.
  6. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences With Simple Tests," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 817-869, August.
  7. Frédéric Docquier & B. Lindsay Lowell & Abdeslam Marfouk, 2009. "A Gendered Assessment of Highly Skilled Emigration," Population and Development Review, The Population Council, Inc., vol. 35(2), pages 297-321.
  8. Albert Bollard & David McKenzie & Melanie Morten & Hillel Rapoport, 2011. "Remittances and the Brain Drain Revisited: The Microdata Show That More Educated Migrants Remit More," World Bank Economic Review, World Bank Group, vol. 25(1), pages 132-156, May.
  9. Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
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  11. Facchini, Giovanni & Mayda, Anna Maria, 2008. "From individual attitudes towards migrants to migration policy outcomes: Theory and evidence," CEPR Discussion Papers 6835, C.E.P.R. Discussion Papers.
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Cited by:
  1. Fernández-Huertas Moraga, Jesús & Rapoport, Hillel, 2011. "Tradable Immigration Quotas," IZA Discussion Papers 5765, Institute for the Study of Labor (IZA).
  2. Frédéric DOCQUIER & Joël MACHADO & Khalid SEKKAT, 2012. "Efficiency gains from liberalizing labor mobility," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Paolo E. Giordani & Michele Ruta, 2011. "Coordination Failures in Immigration Policy," Working Papers CELEG 1101, Dipartimento di Economia e Finanza, LUISS Guido Carli.

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