On the design of an optimal immigration policy

Abstract This paper constructs a model for the study of optimal immigration from the perspective of natives. They have preferences over redistributive transfers, a public good subject to congestion, and over the level of family‐based migration. Border enforcement is costly. The model derives conditions for an optimal immigration policy, which balances skill‐based against family‐based migration, equalizes the fiscal opportunity cost of unauthorized immigration with the marginal cost of enforcement, and balances the effects on transfers against the implied congestion effects. A parameterized version of the model studies the 1994–2008 period and finds legislation projects on immigration consistent with the model's predictions.