Casting the Naturalization of Asylum Seekers as an Economic Problem

The naturalization of asylum seekers is modeled as an economic problem. In choosing their level of investment in host-country-specific human capital, asylum seekers take into consideration the probability of their being naturalized. The government of the host country chooses the probability of naturalization that most encourages the acquisition of such human capital. That human capital, in turn, increases the asylum seekers’ productivity and earnings and, consequently, maximizes the government’s tax receipts if the asylum seekers are allowed to stay permanently. Conditions are presented under which the optimal level of investment in the host-country-specific human capital is positive, and rises in the probability of naturalization. The asylum seeker’s rational response to the probability of (legal) long-term residency is incorporated in the government’s optimization process. Thus, both the asylum seekers and the government of their host country are modeled as optimizing economic agents in a setting not of their own choosing