Sharing the Risks and Rewards of Economic Migration

Innovation and Economic Growth

Article Snapshot

Author(s)

Anu Bradford

Source

University of Chicago Law Review, Vol. 80, No. 1, pp. 29-58, 2013; Columbia Law and Economics Working Paper No. 532, 2016

Summary

To encourage nations to reduce limits on migration, policymakers should create a “Migration Fund.” Funds could be used to compensate source countries for “brain drain,” and to compensate destination countries for losses arising when immigrants fail to find work or must be deported.

Policy Relevance

Limits on immigration such as quotas are harmful. Everyone would be better off if migration limits were reduced.

Main Points

  • The interests of countries from which many emigrate ("source countries") and those of countries that attract many immigrants ("destination countries") conflict; source countries resist the emigration of educated workers, fearing a "brain drain," but destination countries welcome these workers.
     
  • Allowing free migration worldwide would make everyone better off, because workers could move to countries where their labor is needed; the world's real income could increase from $2 trillion to $4.3 trillion per year.
     
  • Source countries encourage migrants to send payments back to the source country; these source payments have a significant positive economic effect, but it is not certain whether the payment adequately compensates source countries for the loss of productive citizens.
     
  • Many destination countries use quotas to limit migration, but these have major disadvantages.
     
    • Quotas are inflexible, and must be set in advance, preventing labor markets from adapting to change.
       
    • Quotas bar many migrants who would not burden local welfare systems.
       
  • A "Migration Fund" could help destination countries bear the costs of immigration and could compensate source countries for the adverse effects of outward migration.
     
    • The migrant or his sponsor could deposit funds in the Migration Fund.
       
    • If the migrant becomes unemployed or must be deported, the destination country could draw on this fund.
       
    • If the migrant is employed, the fund could be released and divided between the migrant and his source country.
       
  • The advantage of the Migration Fund is that it would simultaneously allow the gains from migration to be shared and protect both the source country and the destination country from losses associated with migration.
     
  • The result of adopting a Migration Fund would be to increase the acceptance of migration in both source and destination countries.

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