Fiscal Policy in Infinite-Horizon Endogenous Growth Models: A Survey

We study how immigration policies are determined under voting in a two-country model where immigration redistributes income from wages to capital. Migration decisions are endogenous, there exist border enforcement costs and preference for home-country consumption. We model the migration policy as a pure entry rationing rather than a necessarily porous screening system. Unlike the existing results of polarization, our findings show that preferences over frontier closure are distributed on a continuum, going from total closure to total openness. Thus, the Condorcet winning immigration policy may well be an interior solution. Our results fit the real-life observation that both perfect closure and perfect openness are rare events. We also study the case of a referendum over two alternative policies and show that its outcome depends upon the location of the median voter with respect to the individual indifferent between the two alternatives.