ABSTRACT
The chapter deals with issues that focus on public policy related to the immigration of skilled workforce from developing to developed countries in terms of a general equilibrium framework that explicitly models the political considerations of the policymaker. The model shows how the media image of the political ruler can be linked with the restriction of skilled immigration of the workforce. The most striking result of our analysis is that the outflow of investment as a response to higher skilled wages might make the policymaker even more aggressive and might further restrict immigration and raise the skilled wage rate. Our results are drawn from the recent policy regulations in the USA regarding tougher restrictions on skilled immigration. Our model also explains the fact that why the US economy is strict about the immigration of the workforce even in the presence of wide-scale investment by the US economy in various countries. It explains why the politics in power in the USA might not care much about the threat of capital flight to other countries when the cost of skilled labour rises as a consequence of the immigration policy. In terms of our model one can analyse the behaviour of the economy, as well as that of the politician, as a result of an increase in the tariff rate on importable which causes a reduction in the immigration of skilled Labour force. An increase in the tariff rate on importable on part of a developed country is related to the issue of new protectionism that has been followed by various economies in recent years. The US economy has also adopted this type of policy in the name of new protectionism from the regime of Donald Trump.
