Migration Outflows and Optimal Migration Policy: Rules versus Discretion

Abstract

We study the effects of more open borders on return migration and show that migrants are more likely to return to the origin country when migration rules are softer, because this implies that they could more easily re-migrate if return migration is unsuccessful. As a result, softening migration rules leads to lower net inflows than generally acknowledged. We show that if government follows rules to shape the optimal migration policy, it will chose more open borders than in the case its behavior is discretionary. However, this requires an appropriate commitment technology. We show that electoral accountability may be a solution of the commitment problem. As a matter of fact, observed softer immigration rules in western countries suggest the effectiveness of such a mechanism.