Date of Award
Doctor of Philosophy (PhD)
Dougan, William R
Simon , Curtis J
Tollison , Robert D
Warren , Patrick L
I estimate the demand curve for Legal Permanent Residence in the US, and the government revenues and migrant welfare gains that could be achieved by replacing all or parts of the current immigration system with a Uniform Price Auction. Willingness to pay and welfare are based on the net present value of the difference in income that people earn in the US compared to other countries. I obtain an equilibrium annual demand curve by modeling the dynamics of how pent-up demand for residence responds to the introduction of an auction for residence permits. I separately estimate the demand curves for each major source of demand for residence in the US, and combine them to find the total.
I find that there are currently large inefficiencies in border controls, the Diversity Visa Lottery, and Removals of Noncriminal Aliens. A revenue-maximixing auction of LPR to the the population of workers who have historically entered illegally would generate $10.2 billion in revenues and $8.5 billion in gains to the migrants. Changing the Diversity Visa Lottery to an auction, while keeping the number of visas the same, would give the government $5 billion in revenue annually, while increasing migrant welfare by $2.3 billion. Expanding the annual sales to the revenue-maximizing quantity generates $6.8 billion in revenue, and $8.5 billion in gains for the migrants. Giving non-criminal aliens the chance to purchase LPR for $30,000 before being deported would generate $2.8 billion in revenues and $6.8 billion in gains for the migrants.
If the government auctioned all green cards, at the current level of one million naturalizations per year, the price would be $35,000 and revenues would be $33 billion after processing costs. Migrant welfare would increase by $10.6 billion. The profit-maximizing quantity would be 845,000, resulting in a price of $42,000 and revenues of $34 billion. This extra billion in revenue would be obtained at a cost of $6.7 billion in lost migrant welfare.
Bruns, Richard, "The Demand for Green Cards" (2012). All Dissertations. 908.