Migration of skilled workers: policy interaction between host and source countries
Michael, Michael S.
SourceJournal of Public Economics
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We examine the interaction between policies of the host and source countries in the context of a model of skilled-worker migration. The host country aims to provide low-cost labor for its employers while also taking into consideration the fiscal burden of providing social services to immigrants. It optimizes by setting a time limit on the duration of a guest-worker's permit. The source country maximizes its net output by optimally choosing the amount of training provided to its citizens, some of whom may migrate. We solve for the Nash and cooperative-equilibrium values of the policy instruments. © 2012 Elsevier B.V.