IDEAS home Printed from https://ideas.repec.org/p/crm/wpaper/1008.html
   My bibliography  Save this paper

An Incentive Mechanism to Break the Low-skill Immigration Deadlock

Author

Listed:
  • David de la Croix

    () (IRES and CORE, Universite catholique de Louvain)

  • Frederic Docquier

    () (National Fund for Scientific Research (Belgium) and IRES, Universite catholique de Louvain)

Abstract

Although movements of capital, goods and services are growing in importance, workers movements are impeded by restrictive policies in rich countries. Such regulations carry substantial economic costs for developing countries, and prevent global inequality from declining. Even if rich countries are averse to global inequality, a single country lacks incentives to welcome additional migrants as it would bear the costs alone while the benefits accrue to all rich states. Aversion to global inequality confers a public good nature to the South-North migration of low-skill workers. We propose an alternative allocation of labor maximizing global welfare subject to the constraints that the rich countries are at least as well off as in the current "nationalist" (or "Nashionalist") situation. This "no regret" allocation can be decentralized by a tax-subsidy scheme which makes people internalize the fact that as soon as a rich country welcomes an additional migrant, global inequalities are reduced, and each citizen in the rich world is better off too. Our model is calibrated using statistics on immigration, working-age population and output. We simulate the proposed scheme on different sets of rich countries.

Suggested Citation

  • David de la Croix & Frederic Docquier, 2010. "An Incentive Mechanism to Break the Low-skill Immigration Deadlock," CReAM Discussion Paper Series 1008, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:1008
    as

    Download full text from publisher

    File URL: http://www.cream-migration.org/publ_uploads/CDP_08_10.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    2. David Croix & Frédéric Docquier, 2012. "Do brain drain and poverty result from coordination failures?," Journal of Economic Growth, Springer, vol. 17(1), pages 1-26, March.
    3. Charness, Gary & Rabin, Matthew, 2005. "Expressed preferences and behavior in experimental games," Games and Economic Behavior, Elsevier, vol. 53(2), pages 151-169, November.
    4. Albert Bollard & David McKenzie & Melanie Morten & Hillel Rapoport, 2011. "Remittances and the Brain Drain Revisited: The Microdata Show That More Educated Migrants Remit More," World Bank Economic Review, World Bank Group, vol. 25(1), pages 132-156, May.
    5. Stephen Drinkwater & Paul Levine & Emanuela Lotti & Joseph Pearlman, 2007. "The Immigration Surplus Revisited In A General Equilibrium Model With Endogenous Growth," Journal of Regional Science, Wiley Blackwell, vol. 47(3), pages 569-601.
    6. Patricia Cortés & José Tessada, 2011. "Low-Skilled Immigration and the Labor Supply of Highly Skilled Women," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 88-123, July.
    7. Azam, Jean-Paul & Laffont, Jean-Jacques, 2003. "Contracting for aid," Journal of Development Economics, Elsevier, vol. 70(1), pages 25-58, February.
    8. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
    9. Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398, April.
    10. Giovanni Facchini & Anna Maria Mayda, 2008. "From individual attitudes towards migrants to migration policy outcomes: Theory and evidence," Economic Policy, CEPR;CES;MSH, vol. 23, pages 651-713, October.
    11. Jess Benhabib & Boyan Jovanovic, 2012. "Optimal Migration: A World Perspective," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 321-348, May.
    12. Frédéric Docquier & Hillel Rapoport, 2012. "Globalization, Brain Drain, and Development," Journal of Economic Literature, American Economic Association, pages 681-730.
    13. Immervoll, Herwig & Richardson, Linda, 2011. "Redistribution Policy and Inequality Reduction in OECD Countries: What Has Changed in Two Decades?," IZA Discussion Papers 6030, Institute for the Study of Labor (IZA).
    14. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, vol. 84(1), pages 1-14, May.
    15. Hatton, Timothy J. & Williamson, Jeffrey G., 2004. "Refugees, Asylum Seekers and Policy in Europe," IZA Discussion Papers 1230, Institute for the Study of Labor (IZA).
    16. Timothy J. Hatton, 2004. "Seeking asylum in Europe," Economic Policy, CEPR;CES;MSH, vol. 19(38), pages 5-62, April.
    17. William R. Kerr, 2008. "Ethnic Scientific Communities and International Technology Diffusion," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 518-537, August.
    18. Marco Manacorda & Alan Manning & Jonathan Wadsworth, 2012. "The Impact Of Immigration On The Structure Of Wages: Theory And Evidence From Britain," Journal of the European Economic Association, European Economic Association, vol. 10(1), pages 120-151, February.
    19. Gianmarco I. P. Ottaviano & Giovanni Peri, 2016. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 2, pages 35-80 World Scientific Publishing Co. Pte. Ltd..
    20. Claus Aastrup Jensen & Nikolaj Malchow-Møller & Jan Rose Skaksen, 2010. "Does coordination of immigration policies among destination countries increase immigration?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 19(3), pages 357-384.
    21. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2012. "Comment: On Estimating Elasticities Of Substition," Journal of the European Economic Association, European Economic Association, vol. 10(1), pages 198-210, February.
    22. Michael Ben-Gad, 2008. "Capital-Skill Complementarity and the Immigration Surplus," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 335-365, April.
    23. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
    24. Coughlin, Peter & Nitzan, Shmuel, 1981. "Electoral outcomes with probabilistic voting and Nash social welfare maxima," Journal of Public Economics, Elsevier, vol. 15(1), pages 113-121, February.
    25. Giovanni Facchini & Anna Maria Mayda, 2009. "Does the Welfare State Affect Individual Attitudes toward Immigrants? Evidence across Countries," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 295-314, May.
    26. Gersbach, Hans & Winkler, Ralph, 2007. "On the Design of Global Refunding and Climate Change," CEPR Discussion Papers 6379, C.E.P.R. Discussion Papers.
    27. Ryan Bubb & Michael Kremer & David I. Levine, 2011. "The Economics of International Refugee Law," The Journal of Legal Studies, University of Chicago Press, vol. 40(2), pages 367-404.
    28. George J. Borjas, 2009. "The Analytics of the Wage Effect of Immigration," NBER Working Papers 14796, National Bureau of Economic Research, Inc.
    29. Ortega Francesc, 2010. "Immigration, Citizenship, and the Size of Government," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-40, March.
    30. Frédéric Docquier & B. Lindsay Lowell & Abdeslam Marfouk, 2009. "A Gendered Assessment of Highly Skilled Emigration," Population and Development Review, The Population Council, Inc., vol. 35(2), pages 297-321.
    31. Fehr, Ernst & Schmidt, Klaus M., 2006. "The Economics of Fairness, Reciprocity and Altruism - Experimental Evidence and New Theories," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    32. Frédéric Docquier & Çağlar Ozden & Giovanni Peri, 2016. "The Labour Market Effects Of Immigration And Emigration In Oecd Countries," World Scientific Book Chapters,in: The Economics of International Migration, chapter 6, pages 187-226 World Scientific Publishing Co. Pte. Ltd..
    33. Michael A. Clemens, 2011. "Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 83-106, Summer.
    34. Charles Hirschman, 2001. "The educational enrollment of immigrant youth: A test of the segmented-assimilation hypothesis," Demography, Springer;Population Association of America (PAA), vol. 38(3), pages 317-336, August.
    35. Bertrand CRETTEZ, 2011. "Is Selling Immigration Rights Politically Sustainable ?," Discussion Papers (REL - Recherches Economiques de Louvain) 2011042, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    36. George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
    37. World Bank, 2012. "World Development Indicators 2012," World Bank Publications, The World Bank, number 6014.
    38. Kugler, Maurice & Rapoport, Hillel, 2007. "International labor and capital flows: Complements or substitutes?," Economics Letters, Elsevier, vol. 94(2), pages 155-162, February.
    39. Serge Coulombe & Jean-Francois Tremblay, 2009. "Migration and Skills Disparities across the Canadian Provinces," Regional Studies, Taylor & Francis Journals, vol. 43(1), pages 5-18.
    40. Klein Paul & Ventura Gustavo J, 2007. "TFP Differences and the Aggregate Effects of Labor Mobility in the Long Run," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-38, May.
    41. Bertrand Crettez, 2011. "Is Selling Immigration Rights Politically Sustainable ?," Recherches économiques de Louvain, De Boeck Université, vol. 77(4), pages 33-55.
    42. Benhabib, Jess, 1996. "On the political economy of immigration," European Economic Review, Elsevier, vol. 40(9), pages 1737-1743, December.
    43. Holger Bonin & Bernd Raffelhüschen & Jan Walliser, 2000. "Can Immigration Alleviate the Demographic Burden?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, pages 1-1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giordani, Paolo E. & Ruta, Michele, 2013. "Coordination failures in immigration policy," Journal of International Economics, Elsevier, vol. 89(1), pages 55-67.
    2. Fernández-Huertas Moraga, Jesús & Rapoport, Hillel, 2014. "Tradable immigration quotas," Journal of Public Economics, Elsevier, pages 94-108.
    3. Frédéric Docquier & Joël Machado & Khalid Sekkat, 2015. "Efficiency Gains from Liberalizing Labor Mobility," Scandinavian Journal of Economics, Wiley Blackwell, pages 303-346.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crm:wpaper:1008. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CReAM Administrator) or (Thomas Cornelissen). General contact details of provider: http://edirc.repec.org/data/cmucluk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.