The Immigration Policy Puzzle

Paolo Giordani and Michele Ruta

MPRA Paper from University Library of Munich, Germany

Abstract: 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 first 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 the theory with the evidence. The first 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.

Keywords: Costs and benefits from immigration; immigration policy. (search for similar items in EconPapers)
JEL-codes: F22 J61 (search for similar items in EconPapers)
Date: 2009
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https://mpra.ub.uni-muenchen.de/23584/1/MPRA_paper_23584.pdf original version (application/pdf)

Related works:
Journal Article: The Immigration Policy Puzzle (2011)
Working Paper: The Immigration Policy Puzzle (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:23584

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