This paper, using a model comprising two labour sending countries and one labour receiving country, analyses the optimal tax/subsidy policies of countries to control international migration when labour markets are integrated. The analysis shows that the countries of emigration should tax the migrants to maximise national income. This result suggests that the developing and transitional countries need to re-evaluate their policies of supporting migration. The optimal policy of the receiving country is to use discriminatory tax rates where the sending country with higher labour endowment bears a higher tax burden
