Foreign Aid, Infrastructure Development and Welfare: An Intertemporal Analysis

The author examines the welfare implications of foreign aid within the framework of a two-period, two-country model of international trade. It is up to the donor country to decide what fraction of any given aid package is to be made available for the recipient's immediate consumption in period one, and what part should be allocated for investment in infrastructure that expands the recipient's production possibilities in period two. The focus of the analysis is on the conditions under which both countries agree or disagree on the manner in which the aid funds should be divided between the two options.     

Emigration and welfare in an economy with foreign capital

Discussion of the brain drain problem in the 1970s sparked considerable theoretical research upon the effects of emigration. In many cases, it has been determined that emigration reduces the level of welfare of the remaining residents in the source country, regardless of whether or not human capital is exported. In an economy producing traded and non-traded goods. Rivera-Batiz demonstrated that the level of welfare of the remaining residents declines as a consequence of emigration or at most remains unchanged. This paper generalizes the Rivera-Batiz model in another direction to examine the effects of emigration upon the welfare of remaining residents when foreign capital is employed in the economy. In contrast to other earlier studies, it is found that emigration improves the welfare of remaining residents if both they and the migrants have identical preferences and factor endowments. The author also compares the welfare implications of remittance flows back to the source country when they are used to finance consumption and when they are used to finance capital accumulation.     

Minimum wage,unemployment and international migration

"The link between immigration and unemployment among the native workers of the host country is examined within a model which distinguishes individuals in terms of their ability to perform services in the labor market. An inflow of foreign workers is found to have an ambiguous effect on the level of income received by the native factors of production. This is in sharp contrast to the findings that immigration improves welfare in a fully employed host country and that it unambiguously lowers welfare in a minimum-wage economy with homogeneous labor."     

Illegal aliens,unemployment and immigration policy

"This paper develops a simple two-country model of illegal immigration in an attempt to examine the interaction among variables such as the stock of migrant labor, the unemployment rates of the two economies, and the rate of spending by the host country on the enforcement of its immigration restrictions. The focus of the analysis is on the dynamics of immigration policy and on its role in determining the nature of the mechanism by which disturbances to the labor market of one country are transmitted to that of the other in the short run and in the long run."     

SOME ESSENTIALS OF A WORKABLE GUEST‐WORKER PROGRAM*

A guest‐worker program provides an appealing way of addressing labor shortages in an advanced country. It requires, however, that foreign workers are willing to return home when their work permit expires. I examine how immigration policies, enforcement measures, and opportunities available in various markets at home and abroad affect the behavior of program participants. Welfare of a migrant who obeys the rules of the program is compared with that of workers who choose other options in order to define the conditions under which temporary migration is attractive to potential migrants and at the same time consistent with voluntary return.     

Guest worker programs: A theoretical analysis of welfare of the host and source countries*

This article examines the interaction between migration policies of the host and source countries in the context of a model of guest-worker migration. For the host, the objective is to provide low-cost labor for its employers while avoiding illegal immigration. It optimizes over these objectives by setting the time limit of a guest-worker permit. The source country seeks remittance flows and return migration by offering fiscal benefits to returnees. Within this framework, we solve for the Nash equilibrium values of the migration policy instruments and compare them, to the extent possible, with the ones that emerge in a cooperative setting.     

Controlling Illegal Immigration: On the Scope for Cooperation with a Transit Country

We consider the implications of cooperation with respect to immigration control between a final‐destination country (D) and its poorer neighbor (T). Assuming that the latter serves as a transit country for undocumented immigrants, a key question is how much aid should D provide to T for the purpose of strengthening its immigration controls. The problem for T is to determine what proportion of aid to use strictly for immigration control rather than trying to meet other border‐security objectives. We examine the Nash equilibrium values of the policy instruments of both countries and compare them with those which are optimal when international cooperation on immigration control extends to maximization of joint welfare. We also consider a two‐stage game in which D first decides on how much aid to transfer to T, with the latter subsequently choosing how to use it.     

TEMPORARY EMIGRATION AND WELFARE: THE CASE OF LOW‐SKILLED LABOR

This article studies the implications of temporary emigration for the welfare of a source country. The framework is one of general equilibrium, where the economy's stocks of both capital and labor are endogenously determined by the saving and migration decisions of optimizing agents. Simulations of the model suggest that for realistic values of the parameters, welfare of nonmigrants of the source country is maximized when the migrants are employed abroad for a period in the range of roughly 8–12 years. The ideal duration is found to be an increasing function of the international wage differential, migration costs, and the degree to which the rights of migrants are protected in the host country.