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

  • Schiff, Maurice

    ()

    (World Bank)

Immigration continues to be on the forefront of the policy debate on both sides of the Atlantic. A number of reforms of permanent and guest-worker (GW) immigration programs are being considered, and the temporary movement of service providers under Mode IV (GATS) is being negotiated at the Doha Round of the WTO. This paper contributes to the debate by examining these programs in a model where the host country government maximizes its objective function with respect to three policy instruments: the share of migrants’ deferred income payment, the value of the bond employers must post and forfeit if GWs overstay, and the size of the program. Circular migration and illegal GWs’ status regularization are considered. The paper shows that i) the optimal value of the bond is zero, ii) Mode IV is preferable to GW migration; iii) the optimal policy package consists of Mode IV and permanent migration, and iv) incorporating circular migration improves the policy package. Additional policy implications are also provided.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3083.

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Length: 31 pages
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3083
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  1. Ruhs, Martin & Chang, Ha-Joon, 2004. "The Ethics of Labor Immigration Policy," International Organization, Cambridge University Press, vol. 58(01), pages 69-102, February.
  2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  3. Avi Weiss & Arye L. Hillman & Gil S. Epstein, 1999. "Creating illegal immigrants," Journal of Population Economics, Springer, vol. 12(1), pages 3-21.
  4. de Melo, Jaime & Grether, Jean-Marie & Müller, Tobias, 2001. "The Political Economy of International Migration in a Ricardo-Viner Model," CEPR Discussion Papers 2714, C.E.P.R. Discussion Papers.
  5. Aaditya Mattoo & Antonia Carzaniga, 2003. "Moving People to Deliver Services," World Bank Publications, The World Bank, number 15088.
  6. Constant, Amelie & Zimmermann, Klaus F, 2007. "Circular Migration: Counts of Exits and Years Away from the Host Country," CEPR Discussion Papers 6438, C.E.P.R. Discussion Papers.
  7. 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 30160, The World Bank.
  8. Amin, Mohammad & Mattoo, Aaditya, 2005. "Does temporary migration have to be permanent?," Policy Research Working Paper Series 3582, The World Bank.
  9. Francisco L. Rivera-Batiz, 1999. "Undocumented workers in the labor market: An analysis of the earnings of legal and illegal Mexican immigrants in the United States," Journal of Population Economics, Springer, vol. 12(1), pages 91-116.
  10. Dustmann, Christian, 1997. "Return migration, uncertainty and precautionary savings," Journal of Development Economics, Elsevier, vol. 52(2), pages 295-316, April.
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