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Strategic Immigration Policies and Welfare in Heterogeneous Countries

Author

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  • Masahisa Fujita

    (Department of Economics, Southern Methodist University and CORE, Catholic University of Louvain)

  • Shlomo Weber

    (Southern Methodist University)

Abstract

In this paper we consider a model with two industrialised countries and immigrants that come from “the rest of the world”. The countries are distinguished on the basis of three parameters: population size, bias towards immigrants, and production complementarity between native population and immigrants. We consider a non-cooperative game where each country makes a strategic choice of its immigration quotas. We first show that our game admits a unique pure strategy Nash equilibrium and then study the welfare implications of countries’ choices. It turns out that a county with a higher degree of production complementarity and a higher level of tolerance towards immigrants would allow a larger immigration quota and achieve a higher welfare level. Our results call for coordinated and harmonised immigration policies that may improve the welfare of both countries.

Suggested Citation

  • Masahisa Fujita & Shlomo Weber, 2004. "Strategic Immigration Policies and Welfare in Heterogeneous Countries," Working Papers 2004.2, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2004.2
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    References listed on IDEAS

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    Cited by:

    1. Marcus Berliant & Masahisa Fujita, 2008. "Knowledge Creation As A Square Dance On The Hilbert Cube," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1251-1295, November.
    2. Kemeny, Thomas, 2013. "Immigrant diversity and economic development in cities: a critical review," LSE Research Online Documents on Economics 58458, London School of Economics and Political Science, LSE Library.
    3. Annekatrin Niebuhr, 2010. "Migration and innovation: Does cultural diversity matter for regional R&D activity?," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 563-585, August.
    4. Stephan Brunow & Luise Pestel & Mark Partridge, 2019. "Exports of firms and diversity: an empirical assessment for Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(1), pages 151-175, February.
    5. Nathan, Max, 2013. "The Wider Economic Impacts of High-Skilled Migrants: A Survey of the Literature," IZA Discussion Papers 7653, Institute of Labor Economics (IZA).
    6. Stephan Brunow & Luise Grünwald, 2014. "Exports, agglomeration and workforce diversity: An empirical assessment of German establishments," Norface Discussion Paper Series 2014008, Norface Research Programme on Migration, Department of Economics, University College London.
    7. David B. Audretsch & Maksim Belitski & Julia Korosteleva, 2021. "Cultural diversity and knowledge in explaining entrepreneurship in European cities," Small Business Economics, Springer, vol. 56(2), pages 593-611, February.
    8. Cooke, Abigail & Kemeny, Thomas, 2017. "Cities, immigrant diversity, and complex problem solving," Research Policy, Elsevier, vol. 46(6), pages 1175-1185.
    9. Uhlbach, Wolf-Hendrik & Tartari, Valentina & Kongsted, Hans Christian, 2022. "Beyond scientific excellence: International mobility and the entrepreneurial activities of academic scientists," Research Policy, Elsevier, vol. 51(1).
    10. Moritz Bonn, 2012. "Costs and Benefits of Immigration and Multicultural Interaction," MAGKS Papers on Economics 201240, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. Stephan Brunow & Valentina Nafts, 2013. "What types of firms tend to be more innovative: A study on Germany," Norface Discussion Paper Series 2013021, Norface Research Programme on Migration, Department of Economics, University College London.
    12. Niebuhr, Annekatrin, 2007. "Migrationseffekte: Zuzug Hochqualifizierter stärkt Innovationskraft der Regionen : kulturelle Vielfalt in der Erwerbsbevölkerung wirkt positiv auf die Zahl der Patentanmeldungen," IAB-Kurzbericht 200712, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    13. Max Nathan & Neil Lee, 2013. "Cultural Diversity, Innovation, and Entrepreneurship: Firm-level Evidence from London," Economic Geography, Clark University, vol. 89(4), pages 367-394, October.
    14. Max Nathan, 2011. "Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata," SERC Discussion Papers 0092, Centre for Economic Performance, LSE.
    15. Hans Westlund & Federica Calidoni, 2010. "The Creative Class, Social Capital And Regional Development In Japan," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 22(2‐3), pages 89-108, July.
    16. Marcus Berliant & Masahisa Fujita, 2009. "Dynamics of knowledge creation and transfer: The two person case," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(2), pages 155-179, June.
    17. Moritz Bonn, 2012. "Costs and Benefits of Immigration and Multicultural Interaction," Volkswirtschaftliche Diskussionsbeiträge 154-12, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    18. Klaus Nowotny, 2015. "Institutions and the Location Decisions of Highly Skilled Migrants to Europe. WWWforEurope Working Paper No. 78," WIFO Studies, WIFO, number 57885, February.
    19. Dr Max Nathan, 2013. "The wider economic impacts of high-skilled migrants: a survey of the literature," National Institute of Economic and Social Research (NIESR) Discussion Papers 413, National Institute of Economic and Social Research.
    20. Charlie Karlsson & Jonna Rickardsson & Joakim Wincent, 2021. "Diversity, innovation and entrepreneurship: where are we and where should we go in future studies?," Small Business Economics, Springer, vol. 56(2), pages 759-772, February.
    21. Nathan, Max, 2013. "Top team demographics, innovation and business performance: findings from English firms and cities 2008-9," LSE Research Online Documents on Economics 59250, London School of Economics and Political Science, LSE Library.
    22. Abigail Cooke & Thomas Kemeny, 2016. "Immigrant Diversity and Complex Problem Solving," Working Papers 16-04, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    Immigration quotas; Heterogeneity; Production complementarity; Welfare; Policy Harmonisation;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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