The Immigration Policy Puzzle

Giordani, Paolo E. and Ruta, Michele (2009) The Immigration Policy Puzzle. [Working Paper]. p. 23. MPRA Paper (No. 23584). (Submitted)

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Official URL: http://mpra.ub.uni-muenchen.de/23584/1/MPRA_paper_...

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Abstract/Index

This paper revisits the puzzle of immigration policy: standard economic theory predicts that free immigration improves natives' welfare, but (with few historical exceptions) an open door policy is never implemented in practice. What rationalizes the puzzle? We …rst review the model of immigration policy where the policy maker maximizes national income of natives net of the tax burden of immigration (Borjas, 1995). We show that this model fails to provide realistic policy outcomes when the receiving region's technology is described by a standard Cobb-Douglas or CES function, as the optimal policy imposes a complete ban on immigration or implies an unrealistically large number of immigrants relative to natives. Then the paper describes three extensions of this basic model that reconcile theory with evidence. The …rst introduces a cost of integration of the immigrant community in the destination country; the second takes into account the policy maker's redistributive concern across different social groups; the last extension considers positive spillover effects of (skilled) migrants on the receiving economy.


Item Type:Report / Paper (Working Paper)
Research documents and activity classification:Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions:Department of Business and Management
Uncontrolled Keywords:Costs and benefits from immigration; immigration policy.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:23 Nov 2010 11:33
Last Modified:23 Nov 2010 11:33

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