Migrants as Social Protection ? Simulations of a Market for Work Permits

Workers have the right to take up any job offer in their country of citizenship but not to rent out that right. This paper shows that relaxing this restriction using a two-sided competitive market in work permits can provide a basic income guarantee for workers in migration-destination countries, financed by selling temporary work permits to migrant workers. Regulating the market by imposing a tax on work permits narrows the set of beneficiaries, the income of which can further be complemented with the revenues from such tax. Substantial gains in the destination countries’ gross domestic product can be expected, alongside the first-order gains to migrant workers who would not otherwise have access to the labor markets in destination countries. The paper provides a quantitative illustration by simulating a fictitious market for work permits between Mexico and the United States.