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Strategic Immigration Policies and Welfare in Heterogeneous Countries

  • Masahisa Fujita

    (Institute of Economic Research, Kyoto University)

  • Shlomo Weber

    (Department of Economics, Southern methodist University)

In this paper we consider a model with two industrialized countries and immigrants that come from "the rest of the world." The countries are distinguished on the basis of three parameters; population size, bias toward 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 quota. 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 country 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 harmonized immigration policies that may improve the welfare of both countries.

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Paper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 569.

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Length: 21 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:kyo:wpaper:569
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  1. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-51, July.
  2. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  3. Richard Florida, 2002. "Bohemia and economic geography," Journal of Economic Geography, Oxford University Press, vol. 2(1), pages 55-71, January.
  4. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
  5. Carole Juliette Maignan (ed.) & Gianmarco Ottaviano (ed.) & Dino Pinelli (ed.), 2003. "Economic Growth, Innovation, Cultural Diversity. What Are We All Talking About? A Critical Survey of the State-of-the-art," Working Papers 2003.12, Fondazione Eni Enrico Mattei.
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