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What is the Optimal Immigration Policy? Migration, Jobs and Welfare

Joao Guerreiro, Sergio Rebelo, Pedro Teles

NBER Working Paper No. 26154
Issued in August 2019, Revised in February 2020
NBER Program(s):Economic Fluctuations and Growth

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.

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Document Object Identifier (DOI): 10.3386/w26154

Published: Joao Guerreiro & Sergio Rebelo & Pedro Teles, 2020. "What Is the Optimal Immigration Policy? Migration, Jobs, and Welfare," Journal of Monetary Economics, .

 
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