Sharing the Risks and Rewards of Economic Migration

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 destination country through his labor and tax payments, the funds would be released and divided between the migrant (or his sponsor) and the source country. This way, the migrant or his sponsor would be entitled to recover part of the funds they initially deposited. The source country would similarly be compensated for the loss of its productive citizen, including the costs the source country might have incurred in educating and training the migrant. Finally, a productive migrant who voluntarily returns to the source country after some period of time—without thus imposing a cost on either the destination or the source country—could reclaim the entire funds deposited into the Migration Fund.

This Article is premised on an idea that existing restrictions on migration are inefficient. Quotas employed by many countries impede the entry of many desirable migrants. At the same time, abandoning migration controls altogether is too risky as long as there are substantial differences across the welfare systems of various source and destination countries, potentially incentivizing migrants to relocate to countries with more generous social welfare systems. It proposes a system that enables greater freedom for people to move across borders while insuring destination countries against the risks of opening the doors for undesirable migrants. At the same time, it takes seriously the concerns that source countries may incur costs when losing their human capital to countries that can offer more attractive opportunities for migrants. In the end, the goal is to devise a mechanism that enhances global welfare while also distributing that welfare across the key stakeholders in a way that makes no party worse off.