The Interdependence of Immigration Restrictions and Expropriation Risk

Calahorrano Lena and An de Meulen Philipp
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Calahorrano Lena: Fraunhofer Institute for Applied Information Technology, Schloss Birlinghoven, 53754 Sankt Augustin, Germany
An de Meulen Philipp: Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Hohenzollernstraße 1–3, 45128 Essen, Germany

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 4, 2047-2077

Abstract: Factor price differences create economic incentives for migration to industrialized countries and for capital flows to developing countries. However, immigration restrictions and capital expropriation risks impede factor flows. Using a political-economy approach that takes into account different generations’ conflicting attitudes toward immigration and expropriation, we explore how these restrictions interact. Then, we run two separate country fixed regressions to explore the interdependence of policies empirically. The results from our theoretical model are borne out by the data: We find a positive relationship between emigration and foreign investors’ perceived security of property rights in developing countries and a negative relationship between the US foreign direct investment (FDI) outflows to developing countries and the share of US green cards granted to natives from the respective countries. Based on our analyses, we conclude that the key to lowering mobility barriers is not simply a quid pro quo.

Keywords: demographic change; foreign direct investment; migration; political economy (search for similar items in EconPapers)
JEL-codes: D78 F21 F22 J10 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/bejeap-2013-0034

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