International integration with heterogeneous immigration policies

Abstract

This paper investigates the welfare effects of developed countries with heterogeneous and uncoordinated immigration policies. We build a simple three-country model where two rich countries with different immigration policies receive immigrants from the third developing country. We consider the effects of economic integration in the form of free mobility of native workers and show that under certain conditions, wage gap between two developed countries is crucial whether integration ends in win–win or lose–lose.