We would like to thank two anonymous referees and the seminar participants at the China Center for Economic Studies of Fudan University, on 27 December 2011, especially Zhao Chen and Zhang Yuan, for their comments. This paper was started when Laffargue was visiting the City University of Hong Kong in August 2006 and June 2007.
Congestion and Optimal Immigration Policy
Article first published online: 22 JAN 2013
© 2013 Blackwell Publishing Ltd
Review of Development Economics
Volume 17, Issue 1, pages 88–104, February 2013
How to Cite
Chao, C.-C., Hazari, B. R. and Laffargue, J.-P. (2013), Congestion and Optimal Immigration Policy. Review of Development Economics, 17: 88–104. doi: 10.1111/rode.12017
- Issue published online: 22 JAN 2013
- Article first published online: 22 JAN 2013
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.