Migration between home country and diaspora: An economic analysis

This paper investigates the distribution of a population group between a home country and diaspora, given sequential decision-making regarding migration at the individual level. The home country is attractive to the members of the group, yet their presence there requires a fixed amount of public spending (e.g., on defense). The per-capita tax burden depends then on the size of the domestic population, reflecting a case of "fiscal externality". This results in an inefficient distribution of the group between the home country and the diaspora. Encouraging immigration to the home country is an interest not only of those individuals who are currently in the home country but also of those residing in the diaspora. However, only when the burden of public spending in the home country is large enough do the latter volunteer to bear part of it. Even then, in general, this part is smaller than socially optimal.