Title: Optimal immigration policy: permanent, guest-worker, or Mode IV?

Authors: Maurice Schiff

Addresses: IZA, The Institute for the Study of Labor in Bonn, P.O. Box 7240, 53072 Bonn, Germany

Abstract: Immigration continues to be on the forefront of the policy debate on both sides of the Atlantic. A number of reforms of permanent and guest-worker (GW) immigration programs are being considered, and the temporary movement of service providers under Mode IV (GATS) is being negotiated at the Doha Round of the WTO. This paper contributes to the debate by examining these programs in a model where the host country government maximises its objective function with respect to three policy instruments: the share of migrants' deferred income payment, the value of the bond employers must post and forfeit if GWs overstay, and the size of the program. Circular migration and illegal GWs' status regularisation are considered. The paper shows that: 1) the optimal value of the bond is zero; 2) Mode IV is preferable to GW migration; 3) the optimal policy package consists of Mode IV and permanent migration; 4) incorporating circular migration improves the policy package. Additional policy implications are also provided.

Keywords: guest workers; mode IV; GATS; permanent migration; overstaying; immigration policy; circular migration; illegal immigrants; immigrant status regularisation.

DOI: 10.1504/IJMRM.2015.074173

International Journal of Migration and Residential Mobility, 2015 Vol.1 No.2, pp.122 - 140

Published online: 14 Jan 2016 *

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