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Strategic Immigration Policies and Welfare in Heterogeneous Countries

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Author Info

  • Masahisa Fujita

    (Department of Economics, Southern Methodist University and CORE, Catholic University of Louvain)

  • Shlomo Weber

    (Southern Methodist University)

Abstract

In this paper we consider a model with two industrialised countries and immigrants that come from “the rest of the world”. The countries are distinguished on the basis of three parameters: population size, bias towards immigrants, and production complementarity between native population and immigrants. We consider a non-cooperative game where each country makes a strategic choice of its immigration quotas. We first show that our game admits a unique pure strategy Nash equilibrium and then study the welfare implications of countries’ choices. It turns out that a county with a higher degree of production complementarity and a higher level of tolerance towards immigrants would allow a larger immigration quota and achieve a higher welfare level. Our results call for coordinated and harmonised immigration policies that may improve the welfare of both countries.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.2.

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Date of creation: Jan 2004
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Handle: RePEc:fem:femwpa:2004.2

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Keywords: Immigration quotas; Heterogeneity; Production complementarity; Welfare; Policy Harmonisation;

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References

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  1. Carole Juliette Maignan (ed.) & Gianmarco Ottaviano (ed.) & Dino Pinelli (ed.), 2003. "Economic Growth, Innovation, Cultural Diversity. What Are We All Talking About? A Critical Survey of the State-of-the-art," Working Papers 2003.12, Fondazione Eni Enrico Mattei.
  2. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-51, July.
  3. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
  4. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  5. Richard Florida, 2002. "Bohemia and economic geography," Journal of Economic Geography, Oxford University Press, vol. 2(1), pages 55-71, January.
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Cited by:
  1. Masahisa Fujita & Marcus Berliant, 2004. "Knowledge Creation as a Square Dance on the Hilbert Cube," Econometric Society 2004 North American Summer Meetings 204, Econometric Society.
  2. Thomas Kemeny, 2013. "Immigrant Diversity and Economic Development in Cities: A Critical Review," SERC Discussion Papers 0149, Spatial Economics Research Centre, LSE.
  3. Niebuhr, Annekatrin, 2006. "Migration and innovation: Does cultural diversity matter for regional R&D activity?," IAB Discussion Paper 200614, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  4. Stephan Brunow & Valentina Nafts, 2013. "What types of firms tend to be more innovative: A study on Germany," Norface Discussion Paper Series 2013021, Norface Research Programme on Migration, Department of Economics, University College London.
  5. Dr Max Nathan, 2013. "The Wider Economic Impacts Of High-Skilled Migrants: A Survey Of The Literature," NIESR Discussion Papers 11607, National Institute of Economic and Social Research.

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