Immigration Policy, Self-selection, and the Quality of Immigrants

This paper investigates the effects of immigration quotas on the average quality of immigrants by developing a human capital migration model where efficiency in migration depends on skills and emigration rates are higher among skilled workers. Studying the joint determination of the domestic level of wages and immigrants' self-selection, we find a negative relationship between the wage level and the percentage of educated workers among immigrants, which results in a nonstandard downward-sloping labor supply. In our framework, a higher quota increases the skill mix of immigrants through its negative effect on wages and raises aggregate national income.