The Economics of Immigration

The Economics of Immigration

Örn B. Bodvarsson l Hendrik Van den Berg The Economics of Immigration Theory and Policy

Professor Dr. Örn B. Bodvarsson Department of Economics St. Cloud State University 720 Fourth Avenue South St. Cloud MN 56301 USA obbodvarsson@stcloudstate.edu Professor Dr. Hendrik Van den Berg Department of Economics University of Nebraska P.O.Box 880489 Lincoln NE 68588-0489 USA hvan-den-berg1@unlnotes.unl.edu ISBN 978-3-540-77795-3 e-isbn978-3-540-77796-0 DOI: 10.1007/978-3-540-77796-0 Springer Dordrecht Heidelberg London New York Library of Congress Control Number: 2009926179 # Springer-Verlag Berlin Heidelberg 2009 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publica-tion or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Viola-tions are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Heidelberg, Germany Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

Preface The inspiration for this book came from a collaborative research project on immigration, begun in 2001, when we were colleagues at University of Nebraska- Lincoln (Bodvarsson was a Visiting Professor there in 2001 05). Our project dealt with the application of Say s Law to the supply of immigrant labor, meaning that when the supply of immigrant labor grows in an area, the new immigrants, being consumers, bolster labor demand and help to offset the lower wages they may bring about. Our test case was the seemingly obscure Dawson County, Nebraska, where the meatpacking industry experienced a relatively huge increase in Hispanic-born labor supply around 1990. We found for Dawson County this demand effect to be significant and our results for this test case generalizable to other, more prominent, test cases. This inspired us to study the famous Mariel Boatlift, where Miami s labor force grew suddenly by 7% due to the arrival of nearly 125,000 Cuban refugees in the spring of 1980. In that study, we showed that the Marielitos exerted a significant demand effect, which we argue helps to account for the stylized fact that the Mariel influx had a relatively benign effect on the Miami labor market. We had the privilege of presenting both studies at various conferences in the USA, Norway, Taiwan and Israel, and these studies have been published in Labour Economics and the Research in Labor Economics series (both studies are discussed in detail in this book). As we delved further into the literature on the distributional effects of immigration while doing our collaborative research, we kept looking for resources where someone pulled all the literature together and provided a synthesis of past research. We found not only that that part of the immigration literature lacked a synthesis, but so did the entire field of immigration economics. Graduate and advanced undergraduate students taking migration and labor courses need a reference that ties all the academic literature on migration together and fellow researchers inside and outside of Economics need a reference to satisfy their particular interests in migration. We thus chose to fill this void by writing a book ourselves! This book project began in 2005 and we have since journeyed through the many fascinating veins of literature on the determinants of migration, the characteristics of immigrants, the distributional effects of immigration, immigration policy, and other issues. It has truly been a labor of love for both of us. The aim of this book is twofold. First, more colleges and universities are now offering courses for graduate students and advanced undergraduate students on v

vi Preface migration. These courses are usually populated in Economics departments, but also attract interest from students in fields such as sociology, political science and geography. We have spoken with colleagues who have taught courses on migration and they tell us that, rather than just teaching articles, they very much prefer a reference that provides an expository survey and assessment of the literature. We aim to fill this need with our book. Second, economists, sociologists, political scientists and practitioners in other fields interested in immigration need the same type of reference and we hope that this book fills their particular needs. In the book, we cut a wide swath through the literature, sometimes highlighting and detailing particularly prominent studies. We hope that by using the book, the reader gets enough detail to gain a sufficiently strong understanding of the issues without having to read further, or that the reader gets enough detail to get a solid roadmap for taking a major plunge into the literature. To use a catchy phrase from the retailing arena, we view this book as being either a one-stop shopping resource for those who want a quick, but detailed exposure to the field, or a reliable resource for those who wish to navigate through what is a shopping mall of literature. After having completed the manuscript, we have also come to see this book as a source of research topics for economists and other social scientists. As in the case of many real shopping malls here in the U.S., there is not nearly as much variety or broad coverage of our needs as the sheer size of the mall suggests. The economics literature leaves many immigration questions unanswered. The reader of this book will thus find many exciting research opportunities. We have benefitted greatly from the advice, comments, insights and encouragement from many of our colleagues. We thank in particular our coauthor Joshua Lewer, who contributed substantially to our Mariel Boatlift reexamination study. We thank the many discussants of our papers at meetings of the Society of Labor Economists, European Association of Labor Economists, European Society of Population Economics, Western Economic Association International, Allied Social Science Association, Western Social Science Association, the Great Plains Center at University of Nebraska-Lincoln, and a special conference titled the The Economics of Immigration and Social Diversity, held at Bar Ilan University in Tel Aviv in 2004. We also thank participants at various seminars for their very useful comments. We, of course, thank our respective academic institutions, St. Cloud State University and the University of Nebraska-Lincoln, for funding our travel to the conferences. We also thank the Institute for the Study of Labor (IZA), where we are both research fellows, for helping to promote our work. And we thank Barbara van den Berg for her enthusiastic proofreading and corrections of various drafts of the manuscript. We reserve our most heartfelt thanks for the last, which is to our families, especially our wives Mary Bodvarsson and Barbara van den Berg, for their support, understanding, encouragement, love, and patience, as we put in the many hours preparing multiple drafts of this book. We dedicate this book to them. April, 2009 O rn B. Bodvarsson Hendrik Van den Berg

Contents 1 Introduction to Immigration Economics... 1 1.1 The Late Twentieth Century Immigration Explosion... 2 1.1.1 The Complexity of Immigration... 3 1.1.2 Not Everyone Likes Immigrants... 4 1.1.3 Economists Perspective... 5 1.2 The Determinants of Immigration... 6 1.2.1 Many Factors Discourage Immigration... 6 1.2.2 Considering the Full Set of Push, Pull, Stay, and Stay Away Factors... 9 1.2.3 Recent Shifts in the Economic Forces that Influence Immigration... 9 1.2.4 Immigration is a Complex Phenomenon... 10 1.3 A Brief History of Immigration... 10 1.3.1 Early Migrations.... 11 1.3.2 Recent Immigration... 12 1.4 There are Many Types of Immigrants... 14 1.4.1 Not All Immigrants are Permanent Settlers... 14 1.4.2 Forced Immigration... 15 1.4.3 Some Immigrants are Difficult to Classify... 16 1.5 The Purpose and Organization of this Book... 16 References... 18 Part I Immigration Theory and Evidence 2 The Determinants of International Migration: Theory... 27 Chapter Overview... 27 2.1 The Theory of Internal Migration... 29 2.1.1 Pre-1960 Theory.... 29 2.1.2 Ravenstein and Zipf... 30 2.1.3 The Modern Theory of Internal Migration... 31 2.1.4 Further Influences on Internal Migration... 37 2.2 The Economic Theory of Immigration... 39 2.2.1 The First Borjas Model... 39 2.2.2 Borjas 1991 Model... 46 vii

viii Contents 2.2.3 Recent Extensions of the Borjas Model... 47 2.3 The Family or Household as the Decision-Making Unit... 51 2.3.1 Conflicting Interests and the Family Migration Decision... 52 2.3.2 Mincer s Model..... 52 2.3.3 Family Migration as a Portfolio Decision... 53 2.4 Summary and Conclusions... 53 References... 54 3 Why People Immigrate: The Evidence... 59 Chapter Overview... 59 3.1 Regression Models of Immigration... 60 3.1.1 Empirical Models of Regional Migration... 60 3.1.2 The Gravity Model of International Migration... 61 3.1.3 Some Econometric Problems Related to the Gravity Model... 64 3.2 The Choice of Variables in Statistical Models of Immigration..... 65 3.2.1 Three Examples..... 66 3.2.2 Representing Income Differences... 66 3.2.3 Representing Migration Costs... 66 3.2.4 Representing Source Country Development... 67 3.2.5 Representing Immigration Restrictions... 68 3.3 The Empirical Evidence on the Determinants of Migration... 69 3.3.1 Evidence on Worldwide Migration... 69 3.3.2 Evidence on Migration to Groups of OECD Countries.... 70 3.3.3 Evidence on U.S. Immigration... 70 3.3.4 Immigration to Other Countries... 71 3.3.5 Summarizing the Results... 72 3.4 Summary and Concluding Remarks... 74 3.4.1 The Power of Statistical Models... 74 3.4.2 The Way Forward... 75 References... 76 4 Who Immigrates? Theory and Evidence... 79 Chapter Overview... 79 4.1. Immigrant Selection: The Chiswick Vs. Borjas Debate... 81 4.1.1 Some Unfortunate Terminology... 82 4.1.2 The Chiswick View... 82 4.1.3 The Borjas Model... 84 4.1.4 A More Detailed Look at the Borjas Model... 86 4.1.5 Selection by Observed Characteristics... 88 4.2 Extensions of the Borjas Model... 88 4.2.1 Variable Migration Costs and Migrant Selection... 88 4.2.2 Credit Constraints and Immigrant Selection... 90 4.2.3 Family Migration and Selection Bias... 91 4.3 The Empirical Evidence on Immigrant Selectivity... 93

Contents ix 4.3.1 Borjas Empirical Results... 93 4.3.2 Further Tests of Borjas Model... 94 4.3.3 Tests Based on Counterfactual Density Functions... 95 4.4 The Asymmetric Information Model... 96 4.4.1 Kwok and Leland s Model... 96 4.4.2 Restoring Symmetric Information... 98 4.5 The Theory of Immigrant Assimilation... 98 4.5.1 The Chiswick Study of Assimilation... 99 4.5.2 Potential Bias in Chiswick s Results... 100 4.5.3 Borjas Empirical Results... 101 4.6 Addressing Borjas Critique... 102 4.7 Conclusions... 104 References... 105 5 The Effects of Immigration on the Destination Economy: The Theory... 107 Chapter Overview... 107 5.1 The Macro Effects of Immigration... 108 5.1.1 Homogeneous Labor with Fixed Capital... 108 5.1.2 Homogeneous Labor with Variable Capital... 112 5.1.3 Heterogeneous Labor... 114 5.1.4 Heterogeneous Labor with Constant Capital... 114 5.1.5 Heterogeneous Labor and Perfectly Elastic Capital Supply... 115 5.1.6 How Big is the U.S. Immigrant Surplus?... 115 5.2 Detailing the Distributional Effects of Immigration... 116 5.2.1 The Johnson Model (1980)... 116 5.2.2 The Altonji and Card Model (1991)... 117 5.2.3 The Ottaviano and Peri Model... 118 5.3 Long-Run Adjustment Processes... 120 5.3.1 Internal Migration Responses... 120 5.3.2 Multiple Goods..... 121 5.3.3 Choice of Technology... 122 5.3.4 The Demand Effect of Immigration... 122 5.4 The Demand Effect of Immigration... 122 5.4.1 Say s Law of Immigration... 123 5.4.2 Regional Migration and Local Demand... 124 5.4.3 A Few Models of Immigrant Demand Effects... 125 5.4.4 Bodvarsson and Van den Berg s Lexington Model... 126 5.4.5 The More General Case... 127 5.4.6 Further Models of Immigrant Demand Effects... 127 5.5 Concluding Remarks... 129 References... 130

x Contents 6 How Immigration Impacts the Destination Economy: The Evidence... 133 Introduction... 133 6.1 The Spatial Correlation Method... 134 6.1.1 Cross Section Applications... 135 6.1.2 Dealing with Simultaneity and Spurious Correlation...... 136 6.1.3 Recent Applications of the Spatial Correlation Method... 139 6.1.4 Applications of the Unexpected Exogenous Supply Shock Method... 141 6.1.5 The Mariel Boatlift... 142 6.1.6 Russian Immigrants in Israel... 144 6.1.7 Assessing the Spatial Correlation Method... 146 6.2 The Production Function Method... 146 6.2.1 Grossman s Pioneering Production Study... 147 6.2.2 Gang and Rivera-Batiz... 148 6.2.3 Assessing the Production Function Method... 149 6.3 The Skill Cell Approach..... 150 6.3.1 Borjas Use of National Data versus Regional Data... 150 6.3.2 Ottaviano and Peri s Extension of Borjas Skill Cell Model.... 152 6.3.3 Other Types of Labor Market Cells... 154 6.4 Concluding Remarks... 154 References... 155 7 Estimating Immigration s Impact: Accounting for all Adjustments 159 Chapter Introduction... 159 7.1 Does Immigration Trigger Internal Migration?... 160 7.1.1 Evidence That Immigrants Drive out Natives... 160 7.1.2 Evidence that Immigration has Little Effect on Native Migration... 163 7.2 Migration Biases Estimates of Immigration s Wage Effect... 164 7.3 Does Immigration Change Industry Structure?... 166 7.4 Measuring the Demand Effects of Immigration... 167 7.4.1 Hercowitz and Yashiv s Estimates... 167 7.4.2 Bodvarsson and Van den Berg s Lexington, Nebraska, Study..... 169 7.5.3 Estimating the Demand Effect of the Mariel Boatlift...... 170 7.4.5 Additional Estimates of the Demand Effects of Immigration...... 172 7.6 The Costs of Government Services for Immigrants... 173 7.6.1 Recent Studies for the United States... 174 7.6.2 Are U.S. Immigrants More Costly Today than in the Past?..... 175 7.7 Immigration s External Effects... 176 7.7.1 Economies of Scale... 176

Contents xi 7.7.2 Are There Negative Externalities Associated with Immigration?... 178 7.8 Concluding Remarks... 179 References... 180 8 Immigration and the Source Country... 183 8.1 Remittances and Demand Effects in the Source Country... 184 8.1.1 Demand Effects..... 184 8.1.2 Immigrants and Remittances... 185 8.1.3 A Two-Country View of Remittances... 186 8.2 What We Know About Immigrant Remittances... 188 8.2.1 The Growth of Immigrant Remittances... 188 8.2.2 Remittances as a Percentage of Source Country GDP..... 189 8.2.3 The Reliability of Remittance Data... 190 8.2.4 The Recent Data on the Growth of Immigrant Remittances... 190 8.2.5 Policies to Encourage Remittances... 191 8.2.6 How Remittances are used in the Source Countries... 193 8.2.7 Remittances: Tentative Conclusions... 195 8.3 Negative Externalities from Agglomeration... 195 8.3.1 Economies of Scale, Agglomeration, and Source Countries... 196 8.3.2 Agglomeration Causes the Source Countries to Shrink.... 197 8.4 Immigration and Technology Transfers, Investment, and Trade.. 198 8.4.1 Immigration and International Investment... 199 8.4.2 Immigration and International Trade... 200 8.4.3 Immigration and Services Trade... 200 8.5 The Brain Drain... 201 8.5.1 Human Capital of Immigrants... 201 8.5.2 The Brain Drain as a Development Issue... 202 8.5.3 How Big is the Brain Drain?... 203 8.5.4 Why Human Capital Flees Capital-Scarce Countries...... 209 8.5.5 Brain Drain and Brain Waste... 210 8.6 A Reassessment of the Brain Drain... 210 8.6.1 Remittances Again... 211 8.6.2 The Brain Drain as an Incentive to Seek Education... 211 8.7 Conclusions... 216 References... 217 9 Economic Growth and Immigration... 221 9.1 The Early Models of Economic Growth... 222 9.1.1 Adam Smith s Broad View of Growth... 223 9.1.2 The Classicals and Diminishing Returns... 224 9.1.3 The Role of Immigration in the Classical Model... 226 9.1.4 The Simplistic Harrod Domar Growth Model... 226

xii Contents 9.2 The Solow Growth Model... 227 9.2.1 A Graphic Representation of the Solow Model... 227 9.2.2 Immigration Similarly has no Long-Run Effects... 229 9.2.3 How an Economy Achieves Permanent Growth... 231 9.3 Immigration and Technological Progress... 232 9.3.1 Immigration and Technological Progress... 233 9.3.2 Joseph Schumpeter s Theory of Creative Destruction..... 233 9.3.3 A Graphic Schumpeterian Model... 235 9.3.4 The Opportunity Costs of Innovation... 236 9.3.5 The Gains from Innovation... 238 9.3.6 The Equilibrium Level of R&D Activity... 240 9.4 Immigration in the Schumpeterian Model... 241 9.4.1 Immigrants as an Innovative Resource... 241 9.4.2 Immigrants Increase the Returns to Innovation... 243 9.4.3 Immigrants and Technology Transfers... 243 9.5 Protectionism, Creative Destruction, and Immigration... 246 9.5.1 Creation Requires Destruction... 246 9.5.2 The Holmes and Schmitz Model... 247 9.6 Growth Effects of Immigration in the Source Country... 248 9.6.1 The Overall Growth Effect of Out-Migration... 248 9.6.2 How Remittances are used in Source Countries... 249 9.7 The Brain Drain Again...... 250 9.8 Summary and Conclusions... 251 Appendix: An Alternative Mathematical Schumpeterian Model... 252 A.1 Innovation and Profit... 253 A.2 The Equilibrium Level of Entrepreneurial Activity... 254 A.3 The Equilibrium Rate of Technological Progress... 254 References... 256 Part II Immigration Issues and Cases 10 Temporary Immigration, Involuntary Immigration, and Other Variations on the Standard Model... 261 Chapter Overview... 261 10.1 Return Immigration... 262 10.1.1 Return Immigration as a Response to Changing Circumstances... 263 10.1.2 Correcting Mistakes in Judgement... 264 10.1.3 Source Country Policies to Encourage Immigrants to Return... 264 10.2 Temporary Immigration... 264 10.2.1 The Multinational Corporation and Temporary Immigration..... 265

Contents xiii 10.2.2 Temporary Immigration as a Destination Country Policy... 266 10.2.3 The Diversity of Temporary Immigration... 267 10.3 Analyzing Temporary Migration... 268 10.3.1 A Simple Model: Culture Clash versus Higher Income... 268 10.3.2 Other Determinants of Temporary Immigration... 270 10.3.3 The Role of International Trade... 271 10.3.4 Further Issues Related to Temporary Immigration..... 272 10.3.5 Growth Implications of Temporary Immigration...... 273 10.3.6 Temporary Immigration and the Ageing Problem..... 274 10.4 Asylum Seekers and Refugees... 276 10.4.1 Refugees... 277 10.4.2 The UNHCR.... 278 10.4.3 Asylum Seekers... 278 10.5 Involuntary Immigration... 279 10.5.1 A Model of International Slavery... 280 10.5.2 Other Oppressive Forms of Immigration... 282 10.6 Summary and Conclusions... 283 References... 284 11 Unauthorized Immigration... 287 Introduction... 287 11.1 Estimating Unauthorized Immigration... 289 11.1.1 The Residual Method... 289 11.1.2 Other Methods for Estimating Unauthorized Immigration..... 291 11.2 How Many Unauthorized Immigrants are There?... 292 11.3 Some Characteristics of Unauthorized Immigrants... 295 11.4 The Economic Analysis of Unauthorized Immigration... 296 11.4.1 The Supply and Demand for Unauthorized Workers.. 297 11.4.2 Unauthorized Immigration as a Form of Labor Market Discrimination... 299 11.4.3 Oppression of Unauthorized Workers... 301 11.4.4 Discussion of the Labor Segmentation Hypothesis.... 303 11.4.5 Close Variations on Illegality... 304 11.4.6 Unauthorized Immigration can be Deadly... 306 11.5 The Fiscal Costs and Benefits of Unauthorized Immigration... 307 11.6 Unauthorized Immigration: Policy Options... 309 11.6.1 Border Controls... 309 11.6.2 Employer Sanctions... 310 11.7 Conclusions... 311 References... 312

xiv Contents 12 Hispanic Immigration to the United States... 315 12.1 The Characteristics of Hispanic Immigration... 317 12.2 Assimilation... 320 12.2.1 Hispanics Slow Assimilation... 320 12.2.2 Further Reasons Why Hispanic Assimilation is Slow.. 325 12.2.3 Perhaps It Is All a Data Problem... 327 12.2.4 Political Attitudes of Hispanic Immigrants... 328 12.3 Geographic Diffusion..... 329 12.3.1 Networks and Herding... 329 12.3.2 Towards the South and the Midwest... 330 12.3.3 The Dispersal of Manufacturing Jobs and Immigrant Dispersal... 332 12.4 Explaining Hispanic Immigration... 334 12.4.1 The Welfare Effects on the Source Hispanic Countries... 335 12.4.2 The Demand Effects of Hispanic Immigration... 336 12.5 Future Hispanic Immigration... 336 12.5.1 Will Hispanic Immigration Continue?... 337 12.5.2 Temporary Immigration Programs... 338 12.6 Conclusions... 339 References... 340 Part III Immigration Policy: Introduction 13 Immigration Policy in the United States... 349 Chapter Overview... 349 13.1 Early Immigration Policy... 352 13.1.1 The Borders were not Entirely Open... 353 13.1.2 Assessing the Early Policies... 353 13.2 The Latter Half of the Nineteenth Century... 354 13.2.1 Religion and Immigration... 354 13.2.2 Growing Opposition to Immigration Spurs New Legislation... 355 13.2.3 The Chinese Exclusion Act... 356 13.2.4 Controlling the Border... 357 13.2.5 Immigration Remained Mostly Open... 358 13.2.6 Assessing the Early Policies... 359 13.3 The Shift in Policy in the Early Twentieth Century... 360 13.3.1 The First General Restrictions of Immigration... 360 13.3.2 The Post-World War I Shift in Policy... 361 13.3.3 Immigration During the Great Depression... 362 13.3.4 Immigration Policy During the War... 364 13.4 Post World War II Immigration Policy... 364 13.4.1 Policy Immediately After the War... 364

Contents xv 13.4.2 A New Immigration Law in 1965... 365 13.4.3 The Economic Effects of the 1965 Act... 366 13.4.4 The Growth of Unauthorized Immigration... 367 13.5 Recent United States Immigration Policy... 367 13.5.1 IRCA... 368 13.5.2 After IRCA...... 369 13.5.3 Summarizing Recent U.S. Policy... 370 13.6 Post 9/11 Immigration Policy... 371 13.6.1 Reform of the Immigration Bureaucracy and Enforcement... 371 13.6.2 Employment-Based Permanent Residency... 372 13.6.3 Temporary Work Visas... 374 13.6.4 Immigration Reform Stalls in 2006 and 2007... 374 13.7 Summary and Conclusions... 375 References... 377 14 Immigration Policy in Canada... 379 Chapter Overview... 379 14.1 Overview of Immigration Policy in Canada... 380 14.1.1 Overview of Immigration and Population Growth in Canada... 380 14.1.2 The Early Years... 382 14.1.3 Late Nineteenth Century Immigration... 383 14.1.4 Summary of Nineteenth Century Canadian Immigration Policy... 384 14.2 Canadian Immigration Policy in the Twentieth Century... 385 14.2.1 The First Half of the Twentieth Century... 385 14.2.2 After World War II... 387 14.2.3 Comparing Immigration Legislation... 388 14.3 Canada s Immigration Policy Today... 389 14.3.1 The Canadian Point System... 389 14.3.2 Should Policy Discriminate in Favor of Highly Educated Immigrants?... 390 14.3.3 The Seven Questions in the Early Twenty First Century... 392 14.4 Some Final Observations... 393 References... 394 15 Immigration Policy in Europe... 395 Chapter Overview... 395 15.1 European Migration During the Colonial Era... 398 15.1.1 Colonial Regimes and Immigration... 398 15.1.2 The Nineteenth Century... 400 15.1.3 The Emigration Life Cycle... 401 15.1.4 European Emigration After World War I... 403

xvi Contents 15.2 The Post-World War II Period... 403 15.2.1 Guest Workers... 404 15.2.2 The Post-Soviet Era... 406 15.2.3 Recent EU Immigration Policy... 407 15.3 The Interesting Case of Ireland... 407 15.4 Recent Immigration Policy in Spain... 410 15.6 Can Immigration Solve the Demographic Burden?... 411 15.7 Conclusions... 413 References... 413 16 Conclusions and Final Observations... 415 Chapter Overview... 415 16.1 Immigration: A Fundamental Economic Phenomenon... 416 16.2 We Must Think Outside our Little Boxes... 418 16.3 An Appeal to Holism...... 420 16.3.1 Defining Holism... 420 16.3.2 The Economics of Immigration Must Embrace Holism... 421 16.3.3 The Holistic Approach to the Study of Immigration: An Example... 422 16.4 Developing International Institutions for an International Phenomenon... 425 16.4.1 The Global Commission on International Migration... 425 16.4.2 What is the Optimal Flow of Immigrants?... 426 16.4.3 Small Steps Towards Global Governance... 427 16.5 Final Comment... 428 References... 428