Temporary immigration visas |
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Authors: | Oliver Lorz Karen Schaefer |
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Institution: | 1.Department of Business and Economics, International Economics,RWTH Aachen University,Aachen,Germany |
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Abstract: | This paper deals with recent proposals concerning temporary immigration visas as a means to combat the problem of illegal
immigration. We set up a simple two-period model of international migration between a poor South and a rich North with temporary
visas issued for one period. Because of capital market imperfections, immigrants from the South face additional capital costs
when financing the visa fee. In this model, we find that temporary visas can improve welfare in the North if capital costs
of the immigrants are sufficiently low. For high capital costs, however, a welfare reduction cannot be ruled out. We extend
the model to the case of heterogeneous immigrants and asymmetric information. In this setting, we show that the government
in the North may have an incentive to issue temporary visas for those with low capital costs and to tolerate illegal immigration
of the others. |
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Keywords: | |
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