The Economic Value of A Passport: A Model of Citizenship and the Social Dividend in a Global Economy -

Abstract

In a world of fully mobile capital and highly immobile labour, citizenship is effectively an entitlement to the 'dividend' arising from the social infrastructure accumulated in a particular country of birth. The paper opens with the reasons why the passport (ie citizenship) can in consequence be considered as an economic asset with a value that can in principle be determined analytically. A simple endogenous growth model is set up which defines the level and growth of per capita income in a world economy where capital is fully mobile and labour is fully immobile, and where governments set a rate of taxation such as to achieve the optimal balance between the stocks of private capital and social infrastructure. The 'passport value' is then defined as the difference between national income net of capital charges, wage costs and taxes when divided equally among the population; and is shown to depend on per capita income, the rate of growth and the parameters of the production function. A preliminary estimate of the main variables in the model, and the scale of expenditure on social infrastructure, for a wide range of countries suggests what the order of magnitude of the 'value of a passport' might be. A brief section on the wider implications of the findings concludes.