Help Not Needed? Optimal Host Country Regulation of Expatriate Ngo Workers

20 Pages Posted: 13 Apr 2018

See all articles by Amihai Glazer

Amihai Glazer

University of California, Irvine - Department of Economics

Rune Jansen Hagen

University of Bergen

Jørn Rattsø

Norges Teknisk-Naturvitenskapelige Universitet

Date Written: May 2018

Abstract

Motivated by interventions in poor countries to increase the use of local labor in foreign nongovernmental organizations (NGOs), we address the behavior of these organizations under host government regulation. We extend existing NGO models by distinguishing between local workers and expatriates. The model covers both NGO monopoly and competition in the market for donations. Assuming that NGOs maximize output, we show that regulations in the form of a quota on the number of expatriates or a work permit fee for foreigners reduces NGO output, but increases employment of locals. The optimal quota is more likely to bind in the market structure generating the highest total fundraising surplus. An optimal work permit fee is equivalent to an optimal quota in both the monopoly and duopoly cases. For both instruments, the optimal tightness of regulation is decreasing in the weight the government attaches to the public good relative to domestic incomes and in the importance of NGO output to the supply of the public good. Aggregate NGO output and the level of the public good produced could be higher with a monopoly NGO.

Suggested Citation

Glazer, Amihai and Jansen Hagen, Rune and Rattsø, Jørn, Help Not Needed? Optimal Host Country Regulation of Expatriate Ngo Workers (May 2018). Review of International Economics, Vol. 26, Issue 2, pp. 302-321, 2018. Available at SSRN: https://ssrn.com/abstract=3159635 or http://dx.doi.org/10.1111/roie.12332

Amihai Glazer (Contact Author)

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-854-6563 (Phone)
949-824-2182 (Fax)

Rune Jansen Hagen

University of Bergen ( email )

Muséplassen 1
N-5008 Bergen, +47 55 58
Norway

Jørn Rattsø

Norges Teknisk-Naturvitenskapelige Universitet ( email )

Trondheim NO-7491
Norway

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