Solving dynamic inefficiency with politically sustainable guest worker programs

Armando R. Lopez-Velasco

Economics Letters, 2016, vol. 148, issue C, 1-4

Abstract: An overlapping generations economy that is dynamically inefficient can solve the inefficiency by allowing foreign guest workers every period in order to decrease capital per worker. These policies increase the welfare of all generations and can be politically supported by a young majority under Markov and under trigger strategies that “reward” or “punish” the behavior of previous generations.

Keywords: Markov perfect; Guest workers; Dynamic inefficiency; Overlapping generations (search for similar items in EconPapers)
JEL-codes: C72 F22 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:148:y:2016:i:c:p:1-4

DOI: 10.1016/j.econlet.2016.09.002

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