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Public good congestion and the optimal number of immigrants

Author

Listed:
  • Chao, Chi-Chur
  • Hazari, Bharat R.
  • Laffargue, Jean-Pierre

Abstract

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.

Suggested Citation

  • Chao, Chi-Chur & Hazari, Bharat R. & Laffargue, Jean-Pierre, 2006. "Public good congestion and the optimal number of immigrants," CEPREMAP Working Papers (Docweb) 0607, CEPREMAP.
    • Handle: RePEc:cpm:docweb:0607
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    References listed on IDEAS

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    1. Hazari, Bharat R. & Sgro, Pasquale M., 2003. "The simple analytics of optimal growth with illegal migrants," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 141-151, October.
    2. Berry, R Albert & Soligo, Ronald, 1969. "Some Welfare Aspects of International Migration," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 778-794, Sept./Oct.
    3. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 2002. "Tax burden and migration: a political economy theory and evidence," Journal of Public Economics, Elsevier, vol. 85(2), pages 167-190, August.
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    Keywords

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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