Volume 81, Number 1

April 2006

The Political Economy of Emigration and Immigration

Michael J. Trebilcock, Matthew Sudak

Trebilcock and Sudak consider the economic effects of both emigration and immigration and analyze optimal migration policies in source and destination countries with a view to evaluating their potential compatibility. Although emigration poses risks of fiscal loss and human capital depletion, the empirical basis for these fears is unclear given possible offsetting factors such as remittances, return migration, and skills transfer, initial incentives for education, and dynamic investment effects of citizens living abroad. Studies find mostly positive welfare gains from migration in immigration countries, with the possible exception of native workers with very low skills. In the labor market, immigration has not been shown generally to significantly depress wages or raise unemployment levels; it is generally a net fiscal benefit to source countries.