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The Political Economy of Migration Policies in Oil-rich Gulf Countries

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  • Mehlum, Halvor

    (Dept. of Economics, University of Oslo)

  • Østenstad, Gry

    (Dept. of Economics, University of Oslo)

Abstract

We study the political economy of migration policies in oil-rich Gulf countries focusing on two policy dimensions: a) the number of migrants allowed into the country and b) the assimilation of migrants, where less assimilated migrants on short-term contracts remit more. We develop a two goods macro model with traded and non-traded goods. The migration of guest workers leads to a wage drop hurting citizen workers, while capitalists and oil rent earners benefit. When foreign exchange is remitted out of the economy, the real exchange rate depreciates. The remittance outflow benefits oil rent earners while capitalists and workers lose. Hence the three classes of domestic agents have diverging interests with regard to their preferred policy mix. The results are important for understanding the changes in migration policy in the Gulf, in particular in relation to the sharing of oil rents and on the political influence of the working class and the capitalists.

Suggested Citation

  • Mehlum, Halvor & Østenstad, Gry, 2013. "The Political Economy of Migration Policies in Oil-rich Gulf Countries," Memorandum 18/2013, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2013_018
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    References listed on IDEAS

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    1. Dustmann, Christian & Mestres, Josep, 2010. "Remittances and temporary migration," Journal of Development Economics, Elsevier, vol. 92(1), pages 62-70, May.
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    4. Benhabib, Jess, 1996. "On the political economy of immigration," European Economic Review, Elsevier, vol. 40(9), pages 1737-1743, December.
    5. Kenji Kondoh, 1997. "Permanent Migrants And Cross-Border Workers -The Effects On The Host Country-," Departmental Working Papers 1997-01, McGill University, Department of Economics.
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    2. Mehlum, Halvor & Moene, Karl Ove & Østenstad, Gry, 2025. "Add and rule," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    3. Donato Romano & Silvio Traverso, 2020. "Disentangling the Impact of International Migration on Food and Nutrition Security of Left-Behind Households: Evidence from Bangladesh," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 783-811, September.

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    Keywords

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    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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