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Migration, Tied Foreign Aid and the Welfare State

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Author Info

  • 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
Date of revision:
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. 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, vol. 5(3), pages 04-11, 09.
  2. Thomas Bauer & Astrid Kunze, 2003. "The Demand for High-skilled Worker and Immigration Policy," RWI Discussion Papers 0011, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  3. Razin, A. & Sadka, E. & Swagel, P., 1998. "Tax Burden and Migration: a Political Economy Theory and Evidence," Papers 15-98, Tel Aviv.
  4. Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
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  6. David E. Wildasin, 2004. "Economic Integration and the Welfare State," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 5(3), pages 19-26, 09.
  7. Sajal Lahiri & Pascalis Raimondos, . "Competition for Aid and Trade Policy," EPRU Working Paper Series 94-12, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  8. Michael, Michael S., 2003. "International migration, income taxes and transfers: a welfare analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 401-411, October.
  9. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
  10. Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economics Impact on the Welfare of the Native-Born Population?," CESifo Working Paper Series 1273, CESifo Group Munich.
  11. Feehan, James P., 1992. "The optimal revenue tariff for public input provision," Journal of Development Economics, Elsevier, vol. 38(1), pages 221-231, January.
  12. Chi-Chur Chao & Eden S.H. Yu, 2002. "Immigration and Welfare for the Host Economy with Imperfect Competition," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 327-338.
  13. Agnar Sandmo & David Wildasin, 1999. "Taxation, Migration, and Pollution," International Tax and Public Finance, Springer, vol. 6(1), pages 39-59, February.
  14. M. G. Quibria, 1988. "On Generalizing the Economic Analysis of International Migration: A Note," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 874-76, November.
  15. Epstein, Gil S. & Hillman, Arye L., 2003. "Unemployed immigrants and voter sentiment in the welfare state," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1641-1655, August.
  16. Kenji Kondoh, 1997. "Permanent Migrants And Cross-Border Workers -The Effects On The Host Country-," Departmental Working Papers 1997-01, McGill University, Department of Economics.
  17. Kenzo Abe, 1990. "A Public Input as a Determinant of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 23(2), pages 400-407, May.
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Cited by:
  1. Paweł Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," RSCAS Working Papers 2013/79, European University Institute.
  2. Robert Fenge & Volker Meier, 2006. "Subsidies for Wages and Infrastructure: How to Restrain Undesired Immigration," CESifo Working Paper Series 1741, CESifo Group Munich.

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