Download this Paper Open PDF in Browser

Managing Migration Through Quotas: An Option-Theory Perspective

24 Pages Posted: 17 Jul 2008  

Michele Moretto

University of Padua - Department of Economics; Fondazione Eni Enrico Mattei (FEEM)

Sergio Vergalli

University of Brescia - Department of Economics; Fondazione Eni Enrico Mattei (FEEM), Milan

Multiple version iconThere are 2 versions of this paper

Date Written: July 14, 2008

Abstract

Recent European Legislation on immigration has revealed a particular paradox on migration policies. On the one hand, the trend of recent legislation points to the increasing closure of frontiers (OECD 1999, 2001, 2004), also by using immigration quotas. On the other hand, there is an increase of regularization, i.e., European policies are becoming less tight. Our aim here is to study these counterbalanced and opposite policies in European immigration legislation in a unified framework . To do this, we have used a real option approach to migration choice that assumes that the decision to migrate can be described as an irreversible investment decision where quotas represent an upper bound limit. Our results show that the paradox of counterbalancing immigration policies is not odd but it could be in line with an optimal policy to control migration inflow. In particular, we show that if the government controls the information related to the immigration quota system it could delay the mass entry of immigrants maintaining, in the long run, the required immigration stock and controlling the flows in the short-run.

Keywords: Immigration, Real Option, Quota System

JEL Classification: F22, J61, O15, R23

Suggested Citation

Moretto, Michele and Vergalli, Sergio, Managing Migration Through Quotas: An Option-Theory Perspective (July 14, 2008). FEEM Working Paper No. 51.2008. Available at SSRN: https://ssrn.com/abstract=1159664 or http://dx.doi.org/10.2139/ssrn.1159664

Michele Moretto (Contact Author)

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy
+39 049 8274265 (Phone)
+39 049 8274211 (Fax)

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

Sergio Vergalli

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122
Italy

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

Paper statistics

Downloads
80
Rank
264,984
Abstract Views
724