The Growth and Welfare Effects of International Mass Migration

Abstract

We analyse the effects of immigration quotas on growth and discounted welfare in a North-South version of the quality ladders growth model. Immigration quotas in the North increase the growth rate of utility for all consumers. However, they lower the static utility level and discounted welfare of Northern workers. Also the discounted welfare of asset owners drops. Hence, unlike in the static migration model where the representative agent in the host country benefits from immigration, in our dynamic migration model, the representative agent loses despite a positive growth effect of immigration. In general, the winners of a liberal immigration policy in the North are the immigrants and the remaining workers in the south.migration; growth; welfare