Coordination Failures in Immigration Policy

World Trade Organization Staff Working Paper No. ERSD-2011-02

42 Pages Posted: 3 Feb 2011

See all articles by Michele Ruta

Michele Ruta

Economic Research Division, WTO; Columbia Business School - Economics Department; International Monetary Fund (IMF)

Paolo E. Giordani

LUISS "Guido Carli" University

Date Written: January 26, 2011

Abstract

We propose a theoretical framework for analyzing the problems associated to unilateral immigration policy in receiving countries and for evaluating the grounds for reform of international institutions governing immigration. We build a model with multiple destination countries and show that immigration policy in one country is influenced by measures adopted abroad as migrants choose where to locate (in part) in response to differences in immigration policy. This interdependence gives rise to a leakage effect of immigration policy, an international externality well documented in the empirical literature. In this environment, immigration policy becomes strategic and unilateral behavior may lead to coordination failures, where receiving countries are stuck in welfare inferior equilibria. We then study the conditions under which a coordination failure is more likely to emerge and argue that multilateral institutions that help receiving countries make immigration policy commitments would address this inefficiency.

Keywords: Immigration policy, cross-border externalities, coordination failures, multilateral institutions

JEL Classification: F02, F22, J61

Suggested Citation

Ruta, Michele and Giordani, Paolo E., Coordination Failures in Immigration Policy (January 26, 2011). World Trade Organization Staff Working Paper No. ERSD-2011-02. Available at SSRN: https://ssrn.com/abstract=1753606 or http://dx.doi.org/10.2139/ssrn.1753606

Michele Ruta (Contact Author)

Economic Research Division, WTO ( email )

Rue de Lausanne 154
CH-1211 Geneva
Switzerland

HOME PAGE: http://www.iue.it/Personal/Fellows/MicheleRuta/Welcome.htm

Columbia Business School - Economics Department ( email )

420 West 118th Street
New York, NY 10027
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Paolo E. Giordani

LUISS "Guido Carli" University ( email )

Viale Romania 32
Roma, Roma 00197
Italy

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