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Guest Worker Programs: A Theoretical Analysis of Welfare of the Host and Source Countries

  • Slobodan Djajic
  • Michael S. Michael

This paper examines the interaction between migration policies of the host and source countries in the context of a model of guest-worker migration. For the host, the objective is to provide low-cost labor for its employers while avoiding illegal immigration. It optimizes over these objectives by setting the time limit of a guest-worker permit. The source country seeks remittance flows and return migration by offering fiscal benefits to returnees. Within this framework, we solve for the Nash equilibrium values of the migration policy instruments and compare them, to the extent possible, with the ones that emerge in a cooperative setting.

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Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 05-2011.

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Length: 34 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:ucy:cypeua:05-2011
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  1. Catalina Amuedo-Dorantes, 2006. "Remittances and their microeconomic impacts: evidence from Latin America," Proceedings, Federal Reserve Bank of Dallas, pages 187-197.
  2. Alan de Brauw & Scott Rozelle, 2003. "Household Investment through migration in Rural China," Department of Economics Working Papers 2003-01, Department of Economics, Williams College.
  3. James F. Hollifield & Pia M. Orrenius & Thomas Osang, 2006. "Migration, trade, and development: an overview," Proceedings, Federal Reserve Bank of Dallas, pages 3-8.
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