Migration and the Welfare State: Political-Economy Policy by Assaf Razin

By Assaf Razin

Nobel laureate economist Milton Friedman as soon as famous that loose immigration can't coexist with a welfare country. A welfare nation with open borders could flip right into a haven for terrible immigrants, which might position the sort of monetary burden at the country that native-born electorate could aid less-generous advantages or limited immigration, or either. And but a welfare nation with an getting older inhabitants may well welcome younger expert immigrants. The personal tastes of the native-born inhabitants towards migration depend upon the ability and age composition of the immigrants, and migration rules in a political-economy framework can be adapted hence. This booklet examines how social benefits-immigrations political economic climate conflicts are resolved, with an empirical software to info from Europe and the constructed nations, integrating components from inhabitants, foreign, public, and political economics right into a unified static and dynamic framework. utilizing a static analytical framework to study intra-generational distribution, the authors first specialise in the ability composition of migrants in either loose and limited immigration coverage regimes, drawing on empirical learn from EU-15 and non-EU-15 states. The authors then supply theoretical analyses of comparable concerns in dynamic overlapping generations settings, learning not just intragenerational but in addition intergenerational points, together with old-young dependency ratios and skilled-unskilled conflicts. ultimately, they learn total earnings from or expenditures of migration in either host and resource nations and the race to the ground argument of tax festival among states within the presence of loose migration.

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15 The identification strategy is to decompose the source-host country pairs into two groups: one group, a free-migration group, consists of source-host country pairs within the EU; and the other group, a policy-controlled-migration group, consists of sourcehost country pairs from non-EU countries into the EU. We find evidence in support of the predictions of the parsimonious model that the generosity of the welfare state adversely affects the skill composition of migrants under free migration but exerts a more positive effect under a policy-controlled-migration regime relative to a free-migration regime.

1 Free Migration We now assume that no restrictions are placed on migration by the policymakers in the host country. The level of migration depends entirely on the choice of potential migrants. In choosing whether to migrate, a potential migrant of skill i compares his prospective utility, Vi , in the migration destination to the reservation utility, ui , in the source country. For each skill level i, we assume there is a continuum of would-be migrants differing with respect to the reservation utility level in the source country.

19). 20) where is the skill-difference operator. The dependent variable, ms,h = mss,h − mus,h , can be considered a measure of the skill composition of migrants. 20) estimates relative effects of the regressors over ms,h . A positive estimation of a certain coefficient indicates a positive effect on the skill composition measure the migrants, and vice versa. 20 by the coefficient β2 . Therefore the null hypothesis, describing the effect of τ on σ F, becomes β2 < 0. 21) Also, the effect of τ on σ R is captured by the coefficient β2 + β3 .

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