Migration and Systems Competition

Despite the general consensus in the economic literature that migration is beneficial, the specific institutional design under which it takes place affects the direction and scope of the welfare effect. Migration policy is often analyzed from a unilateral perspective of the receiving state. However, it is important to keep in mind the multi-layeredness of this multi-faceted problem and that every jurisdiction is embedded in larger, dynamic systems in which migration potentially takes place. Migration can be regulated by a variety of instruments—not only immigration laws, but also through welfare laws, bilateral agreements, and wider constitutional orders, such as the EU. It is therefore important to analyze the functioning of all these factors at the same time. A constitutional economics perspective can contribute to finding the optimal allocation of regulatory power to the different levels of government.
There is an important lesson from revisiting Hirschman’s Exit, Voice, and Loyalty—namely, that exit alone is not a sufficient mechanism to improve failing institutions. In that sense, a broader constitutional order shall not only facilitate exit in the Tieboutian sense, but also ensure the possibility of voice. Furthermore, it is important to encourage both exit and voice at a stage when they are still instruments of improvement and not just signs of abandonment.