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An Incentive Mechanism to Break the Low-skill Immigration Deadlock

Author

Listed:
  • David de la Croix

    (Universite Catholique de Louvain)

  • Frederic Docquier

    (Universite Catholique de Louvain)

Abstract

The international mobility of low-skilled workers is constrained by immigration restrictions set by rich countries, preventing extreme poverty from declining in the developing world. Under aversion to extreme poverty, one country's immigration policy affects the welfare of other countries: "nationalist" political decisions are subject to a prisoner's dilemma. Taking advantage of efficiency gains from coordination, we propose an alternative allocation of labor, which minimizes extreme poverty while keeping rich countries as well off as in the nationalist situation. This allocation can be decentralized through international taxes and subsidies. Numerical simulations show that the role of aversion to poverty is negligible when considering each country separately, but becomes important for the design of a coordinated migration policy. (Copyright: Elsevier)

Suggested Citation

  • David de la Croix & Frederic Docquier, 2015. "An Incentive Mechanism to Break the Low-skill Immigration Deadlock," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 593-618, July.
  • Handle: RePEc:red:issued:12-64
    DOI: 10.1016/j.red.2014.09.004
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    Cited by:

    1. Fernández-Huertas Moraga, Jesús & Rapoport, Hillel, 2014. "Tradable immigration quotas," Journal of Public Economics, Elsevier, vol. 115(C), pages 94-108.
    2. Frédéric Docquier & Joël Machado & Khalid Sekkat, 2015. "Efficiency Gains from Liberalizing Labor Mobility," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(2), pages 303-346, April.
    3. Giordani, Paolo E. & Ruta, Michele, 2013. "Coordination failures in immigration policy," Journal of International Economics, Elsevier, vol. 89(1), pages 55-67.
    4. Marco Delogu & Frédéric Docquier & Joël Machado, 2018. "Globalizing labor and the world economy: the role of human capital," Journal of Economic Growth, Springer, vol. 23(2), pages 223-258, June.

    More about this item

    Keywords

    Public good; Inequality aversion; Immigration policy;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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