Sharing the Risks and Rewards of Economic Migration

Abstract

International cooperation on economic migration has been difficult to achieve. The interests of emigration countries (“source countries”) and immigration countries (“destination countries”) seem impossible to align. These countries disagree on who should migrate: source countries resist migration that leads to a brain drain, while destination countries welcome these very migrants given that they are likely to be the most productive citizens and the least likely to become fiscal burdens on the destination country. In addition, destination countries resist migration that leads to domestic unemployment through labor replacement. As a result, international economic migration remains restricted at a substantial cost to world welfare. This Article argues that the global welfare gains from migration can be divided in a way that makes all stakeholders better off. It develops the idea of a “Migration Fund” that is used to insure the destination country against fiscally induced or otherwise undesirable migration while simultaneously serving as a mechanism to compensate the source country for the potential adverse effects of outward migration. As a condition for entry, the migrant or his sponsor deposits funds in a Migration Fund. If the migrant subsequently becomes unemployed or otherwise unable to support himself, this Fund will reimburse the destination country for the welfare benefits the migrant draws. Alternatively, the Fund would cover the costs of the migrant’s possible voluntary repatriation or, when warranted, deportation. This way, the Fund removes the concern that the migrant imposes a cost on the destination country. However, if the migrant remains employed and hence continues to contribute to the welfare of the