What is the optimal immigration policy? Migration, jobs, and welfare

Joao Guerreiro, Sergio Rebelo and Pedro Teles

Journal of Monetary Economics, 2020, vol. 113, issue C, 61-87

Abstract: We study the immigration policy that maximizes the welfare of the native population in an economy where the government designs an optimal redistributive welfare system and supplies public goods. We show that when the government can design different tax systems for immigrants and natives, free immigration is optimal. It is also optimal to use the tax system to encourage the immigration of high-skill workers and discourage that of low-skill workers. When immigrants and natives must be treated alike, banning low-skill immigration and allowing free immigration for high-skill workers is optimal. However, there might be no high-skill immigration when heavy taxes are levied on all high-skill workers, both natives and immigrants.

Keywords: Immigration; Optimal taxation; Welfare state; Redistribution (search for similar items in EconPapers)
JEL-codes: F2 H2 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: What is the Optimal Immigration Policy? Migration, Jobs and Welfare (2019)
Working Paper: What is the Optimal Immigration Policy? Migration, Jobs and Welfare (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:113:y:2020:i:c:p:61-87

DOI: 10.1016/j.jmoneco.2020.04.009

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