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A Macroeconomic Analysis Of Guest Worker Permits

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  • Khraiche, Maroula

Abstract

This paper evaluates the optimality of a temporary worker permit policy from the point of view of the host country by using a two-country dynamic general equilibrium model, calibrated with data from the United States and Mexico. In the model, the decision to migrate and the corresponding decision to return are endogenous and take place within families that are heterogeneous in terms of human capital. After finding a migrant's optimal migration duration and the resulting shrinkage in the wage gap and change in interest rates, the paper derives the restriction on migrants' stay that maximizes natives' utility. It also derives the migrant length of stay that would pass a majority vote. When migration duration is restricted, the fraction of the native population made better off is maximized with a permit length of four years.

Suggested Citation

  • Khraiche, Maroula, 2015. "A Macroeconomic Analysis Of Guest Worker Permits," Macroeconomic Dynamics, Cambridge University Press, vol. 19(1), pages 189-220, January.
    • Handle: RePEc:cup:macdyn:v:19:y:2015:i:01:p:189-220_00
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    Cited by:

    1. Carmelo Pierpaolo Parello, 2022. "Migration and growth in a Schumpeterian growth model with creative destruction [A model of growth through creative destruction]," Oxford Economic Papers, Oxford University Press, vol. 74(4), pages 1139-1166.
    2. Ismael Issifou & Francesco Magris, 2017. "Migration outflows and optimal migration policy: rules versus discretion," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 16(2), pages 87-112, August.
    3. Parello, Carmelo Pierpaolo & Ikhenaode, Bright Isaac, 2021. "Migration, community networks and welfare in neoclassical growth models," Journal of Macroeconomics, Elsevier, vol. 70(C).
    4. Carmelo Pierpaolo Parello, 2021. "Free labor mobility and indeterminacy in models of neoclassical growth," Journal of Economics, Springer, vol. 133(1), pages 27-46, June.
    5. Bright Isaac Ikhenaode & Carmelo Pierpaolo Parello, 2018. "Endogenous Migration in a Two-Country Model with Labor Market Frictions," Working Papers in Public Economics 184, Department of Economics and Law, Sapienza University of Roma.
    6. Ikhenaode, Bright Isaac & Parello, Carmelo Pierpaolo, 2020. "Immigration and remittances in a two-country model of growth with labor market frictions," Economic Modelling, Elsevier, vol. 93(C), pages 675-692.

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