The Political Economy of International Factor Mobility

Posted: 27 Feb 2005

See all articles by Giovanni Facchini

Giovanni Facchini

Tinbergen Institute

Gerald Willmann

Bielefeld University; IfW Kiel; KU Leuven; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

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 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.

Keywords: FDI, migration, political economy, common agency

JEL Classification: F21, F22, D72

Suggested Citation

Facchini, Giovanni and Willmann, Gerald, The Political Economy of International Factor Mobility. Available at SSRN: https://ssrn.com/abstract=577001

Giovanni Facchini (Contact Author)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

HOME PAGE: http://paople.few.eur.nl/facchini

Gerald Willmann

Bielefeld University ( email )

Universitätsstraße 25
Bielefeld, NRW 33613
Germany

IfW Kiel ( email )

P.O. Box 4309
Kiel, Schleswig-Hosltein D-24100
Germany

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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