Yorgos Y. Papageorgiou

Immigration Control and the Welfare State

We examine immigration policy and its redistributive effects using a model of a rich country which must spend on border control in order to regulate immigration from a poor country. There are owners and workers in the rich country, and a public sector whi ch makes redistributive transfers from owners to workers. We first consider the case where illegal immigrants have access to the public sector, a situation currently observed in many countries. We show that as border control becomes more expensive inequal ity in the rich country increases, redistributive transfers may increase or decrease, some immigration is permitted and foreign aid may be used by the rich country in order to reduce the migration pressure along its border with the poor country. Because of nonconvexities, we also show that a small decrease in the aversion to inequality or a small increase in the poor countrys population can lead to the collapse of the redistributive public sector. We then consider excluding illegal immigrants from the pu blic sector (e.g. California Proposition 187). We find that the possibility of collapse vanishes and that the rich country takes the toughest official stance on immigration but does not enforce it with border controls.

An Analysis of Migratory Systems: 2. Operational Framework

This is the second in a series of three interrelated papers which aim to combine evolutionary migration models with stochastic utility theory. The first paper dealt with migratory dynamics. Here the details are given of a choice model, established by McFadden, which can be used in conjunction with migratory dynamics thus providing an explicit link between the macroproperties of the population system and human behaviour. First, the structure of transition probabilities is derived under a two-level decision to migrate. An argument is then given about the empirical form of these probabilities, and the discussion closes with a method which can be used for their maximum likelihood estimation.

ON WELFARE THEORY AND URBAN ECONOMICS

Abstract This paper examines the welfare theorems in the context of urban economics. The standard model of urban economics, which involves a continuum of agents located in a continuous space, is first described. Next, examples are given where both potential theorems fail for variants of the standard model in which preferences depend explicitly on location. Namely, we point out that a Pareto-optimum may not be an equilibrium even though preferences are continuous, convex and locally non-satiated; and that an equilibrium may not be Pareto-optimal even though preferences are continuous and locally non-satiated. A reason for this failure might be found in the heavy requirements that the model imposes on the equilibrium price of land. Firstly, it must fully capture the hedonic pricing of location while, at the same time, it must prevent the movement of consumers between locations. Secondly, at each location, it must equal the marginal rate of substitution between land and the numeraire commodity. Our examples might be relevant to other spatial models, such as differentiated product and hedonic models, location theory models and models of political party competition.

The exponential density function: First principles, comparative statics, and empirical evidence

Abstract It is well-known that the exponential density function can be derived using a compensated demand for bousing with a unitary price elasticity. We investigate how such an elasticity can arise from first principles and are thus able to identify the determinants of the density gradient. We then use these determinants, together with existing comparative statics, to examine unambiguously the relation between the density gradient and some exogenous variables. We conclude that our results are closely supported by existing empirical evidence—except for the effect of urban population size on the density gradient.

Heterogeneity in states and urban structure

The purpose of this paper is to relax the standard assumption of static urban economic theory concerning perfect homogeneity in tastes of individuals belonging to the same class. We study the impact of heterogeneity in tastes on urban structure using the simplest meaningful clone of the standard model: all arguments are presented in the context of a metropolitan area which is partitioned in two homogeneous zones, centre and suburd. Given that individuals have perfect knowledge, heterogeneity in tastes may affect equilibrium in two ways. Namely, individuals may differ with respect to their location decision and, at a particular location, they may differ with respect to how they allocate their initial resources. The strategy adopted here is to study these two effects in isolation.

An analysis of migratory systems: 1. Theory

The task of combining evolutionary migration models with stochastic utility theory is undertaken in a series of three interrelated papers. The present, first, paper deals with the evolution of migratory systems and its dynamics are drawn mainly from work by Haag and Weidlich. A migratory system is defined and then the foundations upon which the evolution of such a system is based are described, including an approximation due to Kurtz which allows the most probable state of the evolutionary model to be represented as a dynamical system. This paper closes with a discussion of disequilibrium, which is central in this series. Disequilibrium is related to the concept of a steady state, the existence of which is established for nonlinear migratory systems of the type discussed here.

Efficient Nash equilibria in a federal economy with migration costs

We consider a federation of two regions populated by identical individuals, in which interregional migration is costly. We define a federation as an economy in which migration may not be restricted by governments. We compare and contrast first-best efficiency (with migration controls) and federal efficiency (without migration controls). We show that first-best efficiency requires maximising total product net of migration cost, while federal efficiency does not. We also show that migration costs may lead to a discontinuous federal utility-possibility frontier and to discontinuous regional reaction functions. We establish that decentralised equilibrium allocations may not be first-best efficient but are federally efficient. We conclude by tying together well-understood results from the limiting cases of free mobility and immobility with our results for the intermediate case.

The Logical Foundations of Urban Economics Are Consistent

The logical foundations of models in urban economics with continua of agents distributed over continuous spaces have recently been questioned. It was argued. among other things, that these models cannot represent properly models with discrete numbers of households, each occupying a parcel of land. In this paper we propose a mapping, based on the continuous model utility and defined over discrete parcels of land, which determines the discrete model utility so that the equilibrium solutions of the two models coincide. Hence the continuous model of urban economics can be used as a tool for studying equilibria and comparative statics of a discrete model which appears to have sound logical foundations. Journal qf Economic Literature Classification Numbers: 022, 930. ‘( 1990 Academic Press, Inc

Conceptual foundations of spatial choice models

As the location choice of an individual determines his or her feasible consumption set, it can be modelled as a two-stage procedure. First, the individual finds an optimal consumption bundle for each one of the feasible consumption sets that correspond to the locations considered. Second, he or she compares the resulting location-specific optimal utility levels and chooses a location for which the optimal utility level is a maximum. It is imagined that an observer applies costless sampling of the feasible consumption sets involved and records the individuals utility level associated with each trial. As the sample can be arbitrarily large, the asymptotic theory of extremes may be used in order to compute the probability that the consumption bundle associated with the highest overall utility level will correspond to any particular location. The way in which different sampling designs generate different choice probability models either in discrete or in continuous geographical space is explained. The multinomial logit model emerges when perfectly even sampling is applied on a discrete spatial choice set.

The impact of transportation cost uncertainty on urban structure

Abstract Under an uncertain transportation cost, residential choice is made before the actual state of the world reveals itself. Formally, this resembles the theory of saving under uncertainty. Exploring this resemblance, we investigate the effect on urban structure of introducing uncertainty in transportation cost. Our main conclusion is that risk does not necessarily have the same effect on the city that an increase in transportation cost does in the deterministic case. If the utility function obeys the ‘principle of decreasing risk aversion to concentration’, introducing risk causes the urban area to contract (as in the case of an increasing transportation cost), but the equilibrium utility level may either increase or decrease. If, on the other hand, utility does not satisfy the above principle, introducing risk causes the utility level to decline (as if the case of an increasing transportation cost), but the urban area may either expand or contract.