Date Added: Sep 2010
This paper examines the role of cultural factors in driving the politics, size and nature (temporary versus permanent migration) of migration policy. The authors show that there exists a broad political failure that results in inefficiently high barriers restricting the import of temporary foreign workers and also admitting an inefficiently large number of permanent migrants. Strikingly, the authors show that countries that are poor at cultural assimilation are better positioned to take advantage of temporary foreign worker programs than more culturally diverse and tolerant countries. Furthermore, relaxing restrictions in the mobility of migrant workers across employers has the potential to raise host country welfare even though it increases migrant wages and lowers individual firms' profits.