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The Political Economy of Immigration Policy: Some Simple Interest Group Analytics

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Abstract

Immigration policy is viewed as endogenously determined by interest group competition. The political effectiveness of each interest group depends on its ability to control free riding. Support maximizing politicians supply policies in response to the pressures exerted by interest groups of differing political effectiveness, such differences being the main factor accounting for the adoption of socially inefficient policies. The model demonstrates that immigration policy outcomes are explained by the skill levels of immigrant workers, lengths of stay in the destination country, ethnic and family ties, and the costs of enforcing immigration laws, together with possible voter prejudices toward immigrants.

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... Amegashie (2004) comes to a similar conclusion. Kaempfer et al. (2004) model interest groups with differences in political effectiveness lobbying for immigration. They find that if groups were all equally effective open immigration policies would be adopted. ...
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Many studies use a Harberger triangle method to estimate the immigration surplus to the native born population and conclude that the benefit of immigration is very small in proportion to the size of the U.S. economy. However this calculation method leaves out the rent seeking costs that the U.S. economy bears when immigration policy is politically determined. This study estimates the rent seeking losses that the U.S. economy could suffer if immigration policy were reformed to further close the borders. The rent seeking losses from 2005 U.S. House of Representatives and 2006 Senate immigration bills are also estimated.
Article
Many studies use a Harberger triangle method to estimate the immigration surplus to the native born population and conclude that the benefit of immigration is very small in proportion to the size of the US economy and thus the United States does not to stand to lose much if immigration is further restricted. This calculation neglects the rent seeking costs that the US economy bears when immigration policy is politically determined. This study estimates the rent seeking losses that the US economy could suffer if immigration policy were reformed to further close the borders.
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