اقتصاد سیاسی عامل تحرک بین المللی

We model the endogenous determination of policy towards international factor mobility. In a common agency setting, domestic interest groups bid for protection from the government and the incumbent politicians maximize a welfare function that depends both on domestic voters' welfare and contributions collected. We characterize equilibrium policies in the price space and show how the degree of complementarity among inputs determines the outcome. We establish a similar result for quotas, allowing for partial rent capturing. For the strategic environment under consideration, we also establish a general equivalence result between tariffs and quotas if capturing is complete.

Economic theory suggests that the free international movement of production factors is efficient, but countries invariably use their sovereignty to restrict migration and influence the flows of foreign direct investment. Notwithstanding Lady Liberty's promise “Give me your tired, your poor, your huddled masses, yearning to breathe free,” virtually no nation has ever adopted an “Open Door” policy towards international migration, regardless of ethnicity or national origin. Movements of capital, and in particular the flow of Foreign Direct Investment, have also been the object of government regulation. At times in the past they were severely restricted, whereas more recently they have been actively subsidized.1 There is substantial evidence regarding the role of pressure groups in shaping the attitude of governments towards factor mobility. Labor Unions have consistently played an important role in determining US migration policy. The enactment of the first legislative measure to systematically limit immigration from a specific country–the Chinese Exclusion Act of 1882–was the result of the efforts of the newly founded Federation of Organized Trade and Labor Unions. Similarly, the American Federation of Labor (AFL) played an important role in the introduction of the Literacy Test provision in the 1917 Immigration Act, with the explicit intent to “screen and reduce the inflow of unskilled workers in the U.S labor force” (Briggs (1998), page 125). More recently, the AFL-CIO supported measures to reduce illegal immigration, that culminated in the 1986 Immigration Reform and Control Act.

In this paper, we have addressed two questions: Why do we observe so much government intervention in cross-border factor markets? What are its determinants? To provide an answer, we have developed a political economy model of international factor mobility, in which policy is endogenously determined by the interaction of an electorally driven government and domestic pressure groups. In a menu auction à la Bernheim and Whinston (1986), organized factors present the government with contribution schedules that specify payments which depend on the degree of protection to be granted by the government. The government then trades off social welfare against contributions, choosing the protection levels–either in terms of prices or quantities–for all the different factors. Since we allow for multiple factors, our model is of considerable generality. Both immigration as well as FDI policy can be explored within our framework. Solving for the equilibrium protection levels reveals how tariffs or quotas that apply to the inflow of foreign factors are determined: they depend, in an important way, on the production structure, the domestic supply of the different factors, and a set of political characteristics of the destination country. The model can be taken to the data, and a preliminary attempt has been undertaken in Facchini and Willmann (2004). In that paper, we estimate the model using a cross section of 20 OECD countries and taking advantage of the variability in policies implemented at the national level. The preliminary results we obtain are encouraging and broadly support the model developed in this paper. In particular, our findings highlight both the role of lobbying as well as the importance of complementarities between factors in shaping policy.