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Congestion and Optimal Immigration Policy

Author

Listed:
  • Chi-Chur Chao

    (CUHK - The Chinese University of Hong Kong [Hong Kong], Graduate School of Business - Deakin University [Burwood])

  • Bharat R. Hazari

    (CUHK - City University of Hong Kong [Hong Kong])

  • Jean-Pierre Laffargue

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper presents a model to explain the stylized fact that many countries have a low ratio of migrants in their population while some countries have a high ratio of migrants. Immigration improves the income of the domestic residents, but migrants also increase the congestion of public services. If migrants are unskilled and therefore pay low taxes, and the government does not limit access to these services, then the welfare of the domestic residents decreases with the number of migrants. Visa auctions can lower the cost of immigration control and substitute legal migrants for illegal migrants. If the government decides to limit the access of migrants to public services, immigration control becomes unnecessary and the optimal number of migrants can be very large.

Suggested Citation

  • Chi-Chur Chao & Bharat R. Hazari & Jean-Pierre Laffargue, 2013. "Congestion and Optimal Immigration Policy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01044970, HAL.
    • Handle: RePEc:hal:cesptp:hal-01044970
    DOI: 10.1111/rode.12017
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    Cited by:

    1. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    2. Stark, Oded & Byra, Lukasz & Casarico, Alessandra & Uebelmesser, Silke, 2017. "A critical comparison of migration policies: Entry fee versus quota," Regional Science and Urban Economics, Elsevier, vol. 66(C), pages 91-107.

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