Public good congestion and the optimal number of immigrants
This paper considers a growth model with migrants who do not own capital. The income of domestic residents and their welfare increase with the number of migrants. Then, a public good is introduced. Migrants do not contribute to its financing but induce congestion effects and decrease the quality of public service. We compute the optimal number of migrants and consumption of public good. When the weight of public consumption increases in the utility of domestic residents, the optimal number of migrants increases. At the equilibrium domestic residents invest too much. Thus, the Government must, not only restrain the number of migrants, but also tax capital to lead the equilibrium to the optimum.
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- Moy, Hon Man & Yip, Chong K., 2006. "The simple analytics of optimal growth with illegal migrants: A clarification," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2469-2475, December.
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