Self-Confirming Immigration Policy

32 Pages Posted: 28 Mar 2012

See all articles by Paolo E. Giordani

Paolo E. Giordani

LUISS "Guido Carli" University

Michele Ruta

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 27, 2012

Abstract

We study immigration policy in a small receiving economy under self-selection of migrants. We show that a non-discriminatory immigration policy choice affects and is affected by the migratory decisions of skilled and unskilled foreign workers. From this interaction multiple equilibria may arise, which are driven by the natives’ expectations on the welfare effects of immigration. In particular, pessimistic (optimistic) beliefs induce a country to impose higher (lower) barriers to immigration, which crowd out (crowd in) skilled migrants and thus confirm initial beliefs. This self-fulfilling mechanism sustains the endogenous formation of an anti or pro-immigration prejudice. We discuss how the adoption of a skill-selective policy affects this result.

Keywords: immigration policy, skilled/unskilled workers, small economy, multiple equilibria

JEL Classification: F220, J240, J610

Suggested Citation

Giordani, Paolo E. and Ruta, Michele, Self-Confirming Immigration Policy (March 27, 2012). CESifo Working Paper Series No. 3762. Available at SSRN: https://ssrn.com/abstract=2029450

Paolo E. Giordani

LUISS "Guido Carli" University ( email )

Viale Romania 32
Roma, Roma 00197
Italy

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

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