Is There Too Little Immigration? An Analysis of Temporary Skilled Migration

20 Pages Posted: 31 Aug 2007

See all articles by Subhayu Bandyopadhyay

Subhayu Bandyopadhyay

Federal Reserve Bank of St. Louis - Research Division; IZA Institute of Labor Economics; West Virginia University

Howard J. Wall

Lindenwood University - Center for Economics and the Environment

Date Written: August 2007

Abstract

This paper presents a model of legal migration of temporary skilled workers from one source country to two host countries, both of which can control their levels of such immigration. Because of complementarities between capital and labor, the return on capital is positively related to the level of immigration. Consequently, when capital is immobile, host nations' optimal levels of immigration are positively related to their capital endowments. Further, when capital is mobile between the host nations, the common return on capital is a function of the levels of immigration in both countries, meaning that immigration is a public good. As a result, when immigration imposes costs on host countries, the Nash equilibrium results in free riding and less immigration than would occur in the cooperative equilibrium. These results are qualitatively unaltered when capital mobility extends to the source nation.

Keywords: Skilled Immigration, Optimal Immigration, Capital Mobility, Externalities, Public Goods, Assimilation Costs

JEL Classification: F22, O24

Suggested Citation

Bandyopadhyay, Subhayu and Wall, Howard J., Is There Too Little Immigration? An Analysis of Temporary Skilled Migration (August 2007). Available at SSRN: https://ssrn.com/abstract=1011002 or http://dx.doi.org/10.2139/ssrn.1011002

Subhayu Bandyopadhyay (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
PO Box 442
St. Louis, MO 63011
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

West Virginia University ( email )

Morgantown, WV 26506-6025
United States
304-293-7879 (Phone)
304-293-7061 (Fax)

Howard J. Wall

Lindenwood University - Center for Economics and the Environment ( email )

209 S. Kingshighway
St. Charles, MO 63301
United States

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