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Gains from migration with a simple non‐linear incentive compatible compensation

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  • Jaume Sempere

Abstract

This paper examines the conditions under which Pareto gains can arise from allowing migration into a duty‐free zone in which, by paying a fee, domestic households can supply their labor at international wages. A duty‐free zone can be considered a non‐linear redistribution scheme for compensation of losers from migration that forces workers to self‐select. This scheme is incentive compatible, as it is based on information about the entire distribution of workers in the population, and does not require knowledge of individual information.

Suggested Citation

  • Jaume Sempere, 2026. "Gains from migration with a simple non‐linear incentive compatible compensation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 22(2), pages 208-213, June.
    • Handle: RePEc:bla:ijethy:v:22:y:2026:i:2:p:208-213
    DOI: 10.1111/ijet.70016
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    References listed on IDEAS

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    4. Peter J. Hammond & Jaume Sempere, 2006. "Gains from Trade versus Gains from Migration: What Makes Them So Different?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 145-170, January.
    5. Facchini, Giovanni & Willmann, Gerald, 1999. "The gains from duty free zones," Journal of International Economics, Elsevier, vol. 49(2), pages 403-412, December.
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    7. Peter J. Hammond, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 263-282.
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