Visas and Tiebout's Preference Revelation

EB-5 visa is an employment based fifth preference visa, better known as the investor visa. Eligible immigrants can become permanent lawful residents, and eventually citizens, upon investing $1 million in a US business that employs at least 10 American workers. In FY2016, China, Vietnam and South Korea comprised the three largest nationality categories for EB-5s. The most popular settlement states were CA, NJ, NY and PA. Taken in the most extreme case, EB-5 visas may represent a modern day Tiebout preference revelation for the wealthy. 

Tiebout’s model of local expenditures attempts to solve the problem of preference revelation. He argues that consumer voters move to the localities that best match their preferences towards the optimal bundle of public goods. Could the same idea be applied to investor visas? It may sound like a stretch, but these visas provide a vehicle for the extension of market principles into public goods provision. Immigrants essentially “purchase” permanent residency, and in doing so "shop" around in pursuit of the optimal public goods provision. The state that they move to from their home country represents that which provides the most desired bundle of public goods.  Of course in this case, moving is not costless. However, if we ignore this violation of Tiebout’s assumption – the basic model could still apply. So strong is the desire of these investors to move to a locale with a more desirable provision of public goods, that their expression of preferences is unmistakable and expensive.