Abstract
We study climate change and international migration in a two-country overlapping generations model with endogenous climate change. Our main findings are that climate change increases migration; small impacts of climate change have significant impacts on the number of migrants; a laxer immigration policy increases long-run migration, aggravates climate change, and increases north–south inequality if climate change impacts are not too small; and a greener technology reduces emissions, long-run migration, and inequality if the migrants’ impact to overall climate change is large. The preference over the policies depends on whether the policy maker targets inequality, wealth, the environment, or the number of migrants.
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Notes
The literature has also focused on the impact of migration on the economy of the destination and origin countries. Migration can affect labor market outcomes such as wages (Borjas 2003) or unemployment (Bencivenga and Smith 1997), pension systems (Razin and Sadka 1999), or human capital formation (Vidal 1998) and growth (Beine et al. 2001).
Modelling migration decisions in this way is common in the literature and implies that a decline in southern income stimulates migration pressure. However, it is important to have in mind that a decreasing income in low-income countries may also lead to a reduction in the number of emigrants if liquidity constraints become more binding. We thank an anonymous referee for pointing out this fact.
It should be clear that this result only holds if preference and production parameters are the same and in the absence of any taxation or subsidy.
Proof: We check whether the equilibrium condition can exist by varying M along its domain \([0,\bar{L}_S]\). We get \(\lim_{M\to0}x^{1-\alpha}\!A_{\!N}L^{ \alpha+\beta-1}_N\!>\!\lim_{M\to0}A_{\!S}L^{\alpha+\beta-1}_S\!>\!0\), and \(\lim_{M\to \bar{L}_S}x^{1-\alpha}A_NL^{\alpha+\beta-1}_N<\) \(\lim_{M\to\bar{L} _S}A_SL^{\alpha+\beta-1}_S\). Since \(x^{1-\alpha}A_NL^{\alpha+\beta-1}_N\) is a monotonically decreasing function of M and since \(A_SL^{\alpha+\beta-1}_S \) is a monotonically increasing function of M from a positive number to infinity, we conclude that a unique steady state exists if \(x^{1-\alpha}A_N \bar{L}^{\alpha+\beta-1}_N>A_S\bar{L}^{\alpha+ \beta-1}_S\).
Under CRTS, no non-trivial steady state exists since \(x^{1-\alpha}A_N= A_S\) is a knife-edge condition. Thus, we have either no migration or complete migration.
Proof: limM→0 LHS > limM→0 RHS > 0, and \(\lim_{M\to\bar{L} _S}LHS<\lim_{M\to\bar{L}_S}RHS\).
In fact, we have \({\frac{\partial M^{acm}}{\partial A_S}}= {-{\frac{1 }{1-\alpha-\beta}}A^{\frac{2-\alpha-\beta}{\alpha+\beta-1}}_S {\frac{ (x^{1-\alpha}A_N)^{\frac{1}{\alpha+\beta-1}}(\bar{L}_S+\bar{L}_N)}{\left(A^{ \frac{1}{\alpha+\beta-1}}_S+(x^{1-\alpha}A_N)^{\frac{1}{\alpha+\beta-1}}\right) ^2}}<0.}\)
While policies may certainly bear costs at the time they are implemented, it could be argued that these costs will be zero in the long run. This could be the case if one considers, for example, R&D expenditure in emission reductions: If a greener technology is developed once, then it is clear that further R&D expenditure is not necessary in the long run. Similarly, immigration policy that leads to a higher probability of obtaining a job for the migrants only requires a discussion in the parliament. The long-run costliness of policies will, however, not change the results. A formal demonstration is available on request from the authors.
We neglect the fact that the government may wish to raise taxes but not invest everything in border controls, respectively, green technologies, an assumption equivalent to the no-Ponzi scheme assumption.
It is straightforward to see that the direct impact of taxes on steady-state production is negative, since \(Y_N=\big[\big({\frac{\rho}{1+\rho}}\beta\big) ^\alpha (1-\tau)^\alpha A_NL_N^\beta\big]^{\frac{1}{1-\alpha}}\).
Imagine the following functional form for the immigration costs x(τ x Y N ) : \(x={\frac{\bar{x}}{1+a\tau_xY_N}}\), where a > 0 is a parameter and \(\bar{x }\) are immigration costs without government intervention. Then, condition 35 drops down to τ x < 1 − α. Thus, the northern government can improve the welfare of its citizens if taxes on production are not larger than the share of non-capital revenues in production.
If we take the same functional form as in endnote 11 for the immigration costs, then it is easy to show that a sufficient condition for \({\frac{d M^{acm}}{d \tau_x}}<0\) is τ x < 1 − α.
Alternatively, imposing \(\bar{\mu}_{{\rm NAM}}\) and \(\bar{\mu}_{{\rm EU}}\) to be equal to what the data suggest for μ could be interpreted to reflect a situation where existing taxes on production are implicitly taken into account in the data. Our analysis would then be to focus on how the introduction of an additional tax rate on production should be allocated between border controls and clean technologies.
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Acknowledgements
We kindly acknowledge useful comments from two anonymous referees, Raouf Boucekkine and David de la Croix. The second author is grateful for financial support from the Chair for Business Economics and the Chair EDF-Sustainable Development at the Ecole Polytechnique.
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Marchiori, L., Schumacher, I. When nature rebels: international migration, climate change, and inequality. J Popul Econ 24, 569–600 (2011). https://doi.org/10.1007/s00148-009-0274-3
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DOI: https://doi.org/10.1007/s00148-009-0274-3