The Economic Consequences of Selective Immigration Policies

The divergence in demographic development between Europe and many other parts of the world is likely to lead to selective immigration of well-trained labor from developing countries into Western Europe.The policy of a selective immigration policy is studied here with a two-country economic growth model. The welfare effects are considered for both the country of emigration and of immigration. This policy is compared to the situation where countries abstain from selective immigration policies.An immigration policy is likely to be restricted to skilled labor. A constant migration flow from the country with a high population growth rate to the country with a lower growth rate is shown to be generally a Pareto-inferior policy. To obtain optimal growth, an investment policy in human and physical capital is the preferable alternative.