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Migration and Social Replacement Incomes: How to Protect Low-Income Workers in the Industrialized Countries Against the Forces of Globalization and Market Integration

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  • Hans-Werner Sinn

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Abstract

This paper discusses how an industrialized country could defend the living standard of its unskilled workers against the wage competition from immigrants. It shows that fixing social replacement incomes implies migration into unemployment. Defending wages with replacement incomes brings about first order efficiency losses that approximate the budget cost of the government. By contrast, wage subsidies involve much smaller welfare losses. While the exclusion of migrants from a national wage replacement program does not avoid the distortions in labor migration, the (temporary) exclusion of migrants from a national wage subsidy program makes it possible to reach the first best migration pattern despite the preservation of the welfare state. Copyright Springer Science + Business Media, Inc. 2005

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Bibliographic Info

Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 12 (2005)
Issue (Month): 4 (August)
Pages: 375-393

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Handle: RePEc:kap:itaxpf:v:12:y:2005:i:4:p:375-393

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Web page: http://www.springerlink.com/link.asp?id=102915

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Keywords: migration; unemployment; welfare;

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References

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  1. Nickell, Stephen J & Symons, James, 1990. "The Real Wage-Employment Relationship in the United States," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 1-15, January.
  2. Hans-Werner Sinn & Wolfgang Ochel, 2003. "Social Union, Convergence and Migration," CESifo Working Paper Series 961, CESifo Group Munich.
  3. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May.
  4. Cremer, H. & Pestieau, P., . "Distributive implications of European integration," CORE Discussion Papers RP -1237, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March.
  6. Hans-Werner Sinn, 2000. "EU Enlargement and the Future of the Welfare State," CESifo Working Paper Series 307, CESifo Group Munich.
  7. Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  8. Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
  9. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
  10. Hans-Werner Sinn & Martin Werding, 2001. "Immigration Following EU Eastern Enlargement," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 2(2), pages 40-47, October.
  11. Richter, Wolfram F., 2004. "Delaying integration of immigrant labor for the purpose of taxation," Journal of Urban Economics, Elsevier, vol. 55(3), pages 597-613, May.
  12. Charles Brown & Wallace E. Oates, 1985. "Assistance to the Poor in a Federal System," NBER Working Papers 1715, National Bureau of Economic Research, Inc.
  13. Franz, Wolfgang & Konig, Heinz, 1986. "The Nature and Causes of Unemployment in the Federal Republic of Germany since the 1970s: An Empirical Investigation," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S219-44, Supplemen.
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Citations

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Cited by:
  1. Hans-Werner Sinn & Christian Holzner & Wolfgang Meister & Wolfgang Ochel & Martin Werding, 2006. "Aktivierende Sozialhilfe 2006 - das Kombilohn-Modell des ifo Instituts," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 59(02), pages 06-27, 01.
  2. Oliver Lorz & Karen Schaefer, 2011. "Temporary immigration visas," International Tax and Public Finance, Springer, vol. 18(3), pages 291-303, June.
  3. Hans-Werner Sinn, 2007. "The Welfare State and the Forces of Globalization," NBER Working Papers 12946, National Bureau of Economic Research, Inc.
  4. Fidrmuc, Jan, 2005. "Labour Mobility During Transition: Evidence from the Czech Republic," CEPR Discussion Papers 5069, C.E.P.R. Discussion Papers.
  5. Tito Boeri & Herbert Brücker, 2005. "Why are Europeans so tough on migrants?," Economic Policy, CEPR & CES & MSH, vol. 20(44), pages 629-703, October.
  6. Lars Calmfors & Giancarlo Corsetti & Michael P. Devereux & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2008. "Chapter 3: The effect of globalisation on Western European jobs: curse or blessing?," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-104, 02.
  7. Boeri, Tito, 2009. "Immigration to the Land of Redistribution," IZA Discussion Papers 4273, Institute for the Study of Labor (IZA).
  8. Alfons Weichenrieder & Oliver Busch, 2005. "Artificial Time Inconsistency as a Remedy for the Race to the Bottom (new title: Delayed Integration as a Possible Remedy for the Race to the Bottom)," CESifo Working Paper Series 1637, CESifo Group Munich.
  9. Antonis Adam & Thomas Moutos, 2006. "A Politico-Economic Analysis of Minimum Wages and Wage Subsidies," CESifo Working Paper Series 1810, CESifo Group Munich.
  10. A. Atkinson, 2008. "The economics of the welfare state in today’s world," International Tax and Public Finance, Springer, vol. 15(1), pages 5-17, February.
  11. Weichenrieder, Alfons J. & Busch, Oliver, 2007. "Delayed integration as a possible remedy for the race to the bottom," Journal of Urban Economics, Elsevier, vol. 61(3), pages 565-575, May.
  12. Thushyanthan Baskaran & Zohal Hessami, 2010. "Globalization, Redistribution, and the Composition of Public Education Expenditures," CESifo Working Paper Series 2917, CESifo Group Munich.

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