Abstract
We study the effects of more open borders on return migration and show that migrants are more likely to return to the origin country when migration rules are softened, because this implies that they could more easily re-migrate if return migration is unsuccessful. As a result, softening migration rules leads to lower net inflows than is generally acknowledged. We show that if government follows rules to shape the optimal migration policy, it will choose more open “borders” than were its behaviour to be discretionary. However, this requires an appropriate commitment technology. We show that electoral accountability may be a solution to the commitment problem. As a matter of fact, observed softer immigration rules in western countries suggest the effectiveness of such a mechanism.
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Notes
We assume risk neutrality for sake of simplicity. By assuming more general utility functions, results would not change from a qualitative point of view. Only, it would become impossible to derive explicitly the critical parameters of the model.
Notice that we assume that government is interested only in minimizing the total number of the migrants in the period under study and therefore ignores the impact of its choice on the stock of migrants settled in D in all future periods.
Notice that the commitment problem arises in correspondence only to the realization of the adverse shock. Indeed, as we have already seen in correspondence to the good shock, we have that p H = 1 is not only optimal but also time consistent.
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Acknowledgements
We would like to thank an anonymous referee for his very helpful comments and suggestions. We would also like to acknowledge Toke Aidt, Rémi Bazillier, Francesca Busetto, Giulio Codognato, Jean-Pierre Drugeon, Clara Graziano, Daniel Mirza, Flavio Pressacco, Giuseppe Russo and Marina Shenker for their help. Any errors are our own.
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Issifou, I., Magris, F. Migration outflows and optimal migration policy: rules versus discretion. Port Econ J 16, 87–112 (2017). https://doi.org/10.1007/s10258-017-0130-4
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DOI: https://doi.org/10.1007/s10258-017-0130-4