MIGRATION COMPETITION IN ENLARGED EUROPEAN UNION: A THEORETICAL MODEL

ABSTRACT In this article, we propose a theoretical model which help us to define two possible settings where the European “migration competition” could be analysed. First, we analyse the scenario in which there are two regions: a receiving country and a net sending country. In this scenario we introduce the possibility for each country to increase, by investing resources, the level of integration between countries which consequently reduces the level of migration costs. Thus it is possible to capture the receiving country’s trade off between investing resources in order to attract foreign high skilled workers or investing on educational incentives for his citizens. Second, we analyse the scenario in which there are three regions. In both case analysed, the presence of a central authority which coordinates the migration and fiscal policies is determinant to obtain better results. JEL Classification: F22, I23, J24, P16