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Optimal Immigration Policy: Permanent, Guest-Worker, or Mode IV?

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  • Schiff, Maurice

    (World Bank)

Abstract

Host countries have implemented permanent and guest-worker (GW) immigration programs in recent decades, while the temporary movement of service providers under Mode IV of the GATS is one of the issues being negotiated at the Doha Round of the WTO. Though decisions on what programs to adopt have acquired increased urgency, the task has been complicated by host countries’ concern with migrants’ massive overstaying in past GW programs. This paper contributes to the debate by examining these migration regimes in a model in which the host country maximizes an objective function with respect to i) the size of the migration program, and – in the case of temporary migration – ii) the value of a bond employers must buy and iii) the share of migrants’ income whose payment is deferred. The maximization also takes into account the impact of the policy on source country cooperation on illegal immigration, migrants’ incentives and their preference for overstaying. The model solves for the policy measures, the overstaying probability, and the level of illegal migration. The paper concludes that the optimal policy is a combination of Mode IV-type and permanent migration.

Suggested Citation

  • Schiff, Maurice, 2007. "Optimal Immigration Policy: Permanent, Guest-Worker, or Mode IV?," IZA Discussion Papers 2871, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2871
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    References listed on IDEAS

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    10. Schiff, Maurice, 2002. "Love thy neighbor: trade, migration, and social capital," European Journal of Political Economy, Elsevier, vol. 18(1), pages 87-107, March.
    11. Holzmann, Robert & Munz, Rainer, 2004. "Challenges and opportunities of international migration for the EU, its member states, neighboring countries, and regions : a Policy Note," Social Protection Discussion Papers and Notes 30160, The World Bank.
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    Citations

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    Cited by:

    1. Gordon H. Hanson, 2009. "The Economic Consequences of the International Migration of Labor," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 179-208, May.
    2. Steffen Reinhold & Kevin Thom, 2013. "Migration Experience and Earnings in the Mexican Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 48(3), pages 768-820.
    3. Slobodan Djajić & Michael S. Michael, 2013. "Guest worker programs: A theoretical analysis of welfare of the host and source countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(3), pages 454-475, April.
    4. Gordon Hanson, 2010. "The Governance of Migration Policy," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(2), pages 185-207.
    5. repec:rsc:rsceui:2008/39 is not listed on IDEAS
    6. Jesus Fernandez-Huertas Moraga, 2008. "A General Model of Bilateral Migration Agreements," Working Papers 360, Barcelona School of Economics.
    7. Docquier, Frédéric & Schiff, Maurice, 2008. "Measuring Skilled Emigration Rates: The Case of Small States," IZA Discussion Papers 3388, Institute of Labor Economics (IZA).
    8. Slobodan Djajić & Alexandra Vinogradova, 2015. "Overstaying Guest Workers and the Incentives for Return," CESifo Economic Studies, CESifo Group, vol. 61(3-4), pages 764-796.
    9. Wouterse, Fleur, 2012. "Migration and Rural Welfare: The Impact of Potential Policy Reforms in Europe," World Development, Elsevier, vol. 40(12), pages 2427-2439.
    10. Jacques Poot & Anna Strutt, 2010. "International Trade Agreements and International Migration," The World Economy, Wiley Blackwell, vol. 33(12), pages 1923-1954, December.
    11. Alessandra Venturini, 2008. "Circular Migration as an Employment Strategy for Mediterranean Countries," RSCAS Working Papers carim2008/39, European University Institute.
    12. Djajić, Slobodan & Mesnard, Alice, 2015. "Guest workers in the underground economy," Labour Economics, Elsevier, vol. 35(C), pages 53-62.
    13. Slobodan Djajic & Michael S. Michael, 2009. "Temporary Migration Policies and Welfare of the Host and Source Countries: A Game-Theoretic Approach," CESifo Working Paper Series 2811, CESifo.

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    More about this item

    Keywords

    policy; immigration; permanent; guest-worker; Mode IV; illegal; cooperation;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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