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Migration, Tied Foreign Aid and the Welfare State

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  • Panos Hatzipanayotou
  • Michael S. Michael

Abstract

In this paper we highlight aspects related to the links between international migration, foreign tied aid and the welfare state. We model migration as a costly movement from an aid-recipient developing country with low income, poor infrastructure, and no welfare system, towards a rich donor, developed country with a well-developed welfare system. Within this model we find, among other things, that the best response of the developed donor country is to increase aid as the co-financing rate by the recipient country increases. When the immigration cost decreases, e.g. due to greater economic integration between the two countries, it is beneficial for the donor country to increase aid.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2005/wp-cesifo-2005-07/cesifo1_wp1497.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1497.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1497

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Keywords: migration; tied foreign aid; welfare state;

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References

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  1. Michael, Michael S., 2003. "International migration, income taxes and transfers: a welfare analysis," Journal of Development Economics, Elsevier, Elsevier, vol. 72(1), pages 401-411, October.
  2. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers, International Monetary Fund 98/102, International Monetary Fund.
  3. David E. Wildasin, 2004. "Economic Integration and the Welfare State," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 5(3), pages 19-26, 09.
  4. Epstein, Gil S. & Hillman, Arye L., 2003. "Unemployed immigrants and voter sentiment in the welfare state," Journal of Public Economics, Elsevier, Elsevier, vol. 87(7-8), pages 1641-1655, August.
  5. Gordon M Myers & Yorgos Y Papageorgiou, 1997. "Immigration Control and the Welfare State," Department of Economics Working Papers 1997-01, McMaster University.
  6. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 2002. "Tax burden and migration: a political economy theory and evidence," Journal of Public Economics, Elsevier, Elsevier, vol. 85(2), pages 167-190, August.
  7. Sajal Lahiri and Pascalis Raimondos, . "Competition for Aid and Trade Policy," Economics Discussion Papers, University of Essex, Department of Economics 433, University of Essex, Department of Economics.
  8. Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of Its Economic Impact on the Welfare of the Native Born Population?," NBER Working Papers 10682, National Bureau of Economic Research, Inc.
  9. Thomas K. Bauer & Astrid Kunze, 2004. "The demand for high-skilled workers and immigration policy," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, ULB -- Universite Libre de Bruxelles, vol. 47(1), pages 77-88.
  10. Michael S. Michael & Panos Hatzipanayotou, 2000. "Welfare Effects of Migration in Societies with Indirect Taxes, Income Transfers and Public Good Provision," CESifo Working Paper Series 347, CESifo Group Munich.
  11. Kenji Kondoh, 1997. "Permanent Migrants And Cross-Border Workers -The Effects On The Host Country-," Departmental Working Papers, McGill University, Department of Economics 1997-01, McGill University, Department of Economics.
  12. Agnar Sandmo & David Wildasin, 1999. "Taxation, Migration, and Pollution," International Tax and Public Finance, Springer, Springer, vol. 6(1), pages 39-59, February.
  13. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 27(3), pages 637-56, August.
  14. Kenzo Abe, 1990. "A Public Input as a Determinant of Trade," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 23(2), pages 400-407, May.
  15. Chi-Chur Chao & Eden S.H. Yu, 2002. "Immigration and Welfare for the Host Economy with Imperfect Competition," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 42(2), pages 327-338.
  16. Feehan, James P., 1992. "The optimal revenue tariff for public input provision," Journal of Development Economics, Elsevier, Elsevier, vol. 38(1), pages 221-231, January.
  17. Hans-Werner Sinn, 2004. "Social Union, Migration and the Constitution: Integration at Risk," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 5(3), pages 04-11, 09.
  18. M. G. Quibria, 1988. "On Generalizing the Economic Analysis of International Migration: A Note," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 21(4), pages 874-76, November.
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Cited by:
  1. Robert Fenge & Volker Meier, 2006. "Subsidies for Wages and Infrastructure: How to Restrain Undesired Immigration," CESifo Working Paper Series 1741, CESifo Group Munich.
  2. Pawel Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," EUI-RSCAS Working Papers, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS) p0356, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).

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