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The Interdependence of Immigration Restrictions and Expropriation Risk

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  • Calahorrano Lena

    (Fraunhofer Institute for Applied Information Technology, Schloss Birlinghoven, 53754 Sankt Augustin, Germany)

  • an de Meulen Philipp

    (Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Hohenzollernstraße 1–3, 45128 Essen, Germany)

Abstract

Factor price differences create economic incentives for migration to industrialized countries and for capital flows to developing countries. However, immigration restrictions and capital expropriation risks impede factor flows. Using a political-economy approach that takes into account different generations’ conflicting attitudes toward immigration and expropriation, we explore how these restrictions interact. Then, we run two separate country fixed regressions to explore the interdependence of policies empirically. The results from our theoretical model are borne out by the data: We find a positive relationship between emigration and foreign investors’ perceived security of property rights in developing countries and a negative relationship between the US foreign direct investment (FDI) outflows to developing countries and the share of US green cards granted to natives from the respective countries. Based on our analyses, we conclude that the key to lowering mobility barriers is not simply a quid pro quo.

Suggested Citation

  • Calahorrano Lena & an de Meulen Philipp, 2015. "The Interdependence of Immigration Restrictions and Expropriation Risk," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(4), pages 2047-2077, October.
    • Handle: RePEc:bpj:bejeap:v:15:y:2015:i:4:p:2047-2077:n:1
    DOI: 10.1515/bejeap-2013-0034
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