Strategic Immigration Policies and Welfare in Heterogeneous Countries

29 Pages Posted: 19 Feb 2004

See all articles by Shlomo Weber

Shlomo Weber

Southern Methodist University (SMU) - Department of Economics; New Economic School

Masahisa Fujita

Kyoto University - Institute of Economic Research

Date Written: January 2004

Abstract

In this paper we consider a model with two industrialised countries and immigrants that come from the rest of the world. The countries are distinguished on the basis of three parameters: population size, bias towards immigrants, and production complementarity between native population and immigrants. We consider a non-cooperative game where each country makes a strategic choice of its immigration quotas. We first show that our game admits a unique pure strategy Nash equilibrium and then study the welfare implications of countries' choices. It turns out that a county with a higher degree of production complementarity and a higher level of tolerance towards immigrants would allow a larger immigration quota and achieve a higher welfare level. Our results call for coordinated and harmonised immigration policies that may improve the welfare of both countries.

Keywords: Immigration quotas, Heterogeneity, Production complementarity, Welfare, Policy Harmonisation

JEL Classification: C72, F22, O3, R1

Suggested Citation

Weber, Shlomo and Fujita, Masahisa, Strategic Immigration Policies and Welfare in Heterogeneous Countries (January 2004). FEEM Working Paper No. 02.2004. Available at SSRN: https://ssrn.com/abstract=500723 or http://dx.doi.org/10.2139/ssrn.500723

Shlomo Weber (Contact Author)

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3577 (Phone)
214-768-1821 (Fax)

New Economic School ( email )

Moscow
Russia
+ 7-495-9569508 (Phone)

Masahisa Fujita

Kyoto University - Institute of Economic Research ( email )

Yoshida-Honmachi
Sakyo-ku
Kyoto 606-8501
Japan
+81 75 753 7122 (Phone)
+81 75 753 7198 (Fax)

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