Despite potentially large welfare gains, the barriers to the international mobility of workers are high and persistent. We develop a simple framework that throws light on why the globalization of labor differs from that of goods and capital. In doing so we ask whether a government will ever spurn the large welfare increase from freer labor mobility, even if such a policy had no distributional impact on native workers, was desired by the host country's citizens and if the repatriation of overstaying workers could be costlessly enforced. In addressing these questions we examine the role of culture in driving the political economy of migration policy. The paper shows that there exists a broad political failure that results in inefficiently high barriers restricting the import of foreign workers. We examine the conditions under which a country is best positioned to reap the economic gains from the globalization of temporary (or permanent) labor migration. We show that culturally homogeneous countries that are poor at cultural assimilation may be better positioned to take advantage of short term foreign worker programs than more culturally diverse and tolerant countries. Our framework suggests that simple alteration of existing policy measures can help encourage international labor mobility. In particular, restrictions on the mobility of the foreign worker across firms (e.g. the H-1B program in the U.S. or the Employment R in Singapore) might work to the detriment of the host country, and make it more difficult to sustain a credible temporary worker migration program. Therefore, any policy measure that improves the mobility (and bargaining power) of the foreign worker helps not only the worker, but more surprisingly, also boosts host country welfare.
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number
1196.
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior F22 - International Economics - - International Factor Movements and International Business - - - International Migration J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
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Stephen Coate & Stephen Morris, 1999.
"Policy Persistence,"
American Economic Review,
American Economic Association, vol. 89(5), pages 1327-1336, December.
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Stephen Coate & Stephen Morris, .
""Policy Persistence '',"
CARESS Working Papres
95-19, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
[Downloadable!]
Stephen Coate & Stephen Morris, .
"Policy Persistence,"
CARESS Working Papres
97-2, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
[Downloadable!]
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