A Market for Work Permits

Produced by: 
National Bureau of Economic Research
Available from: 
December 2019
Paper author(s): 
Michael Lokshin
Martin Ravallion
Topic: 
Labor
Year: 
2020

It will be politically difficult to liberalize international migration without protecting host-country workers. The paper explores the scope for efficiently managing migration using a competitive market for work permits. Host-county workers would have the option of renting out their citizenship work permit for a period of their choice, while foreigners purchase time-bound work permits. Aggregate labor supply need not rise in the host country. However, total output would rise and workers would see enhanced social protection. Simulations for the US and Mexico suggest that the new market would attract many skilled migrants, boosting GDP and reducing poverty in the US.

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