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Migration, Tied Foreign Aid and the Welfare State

Author

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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.

Suggested Citation

  • Panos Hatzipanayotou & Michael S. Michael, 2005. "Migration, Tied Foreign Aid and the Welfare State," CESifo Working Paper Series 1497, CESifo.
    • Handle: RePEc:ces:ceswps:_1497
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sule Akkoyunlu, 2012. "Dış ticaret, ekonomik yardım, doğrudan yabancı yatırımlar ve göçmen dövizleri Türkiye'den olan göçü frenleyebilir mi?," Migration Letters, Migration Letters, vol. 9(4), pages 311-327, December.
    2. Paweł Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," RSCAS Working Papers 2013/79, European University Institute.
    3. Kaczmarczyk, Pawel, 2015. "Burden or Relief? Fiscal Impacts of Recent Ukrainian Migration to Poland," IZA Discussion Papers 8779, Institute of Labor Economics (IZA).
    4. Robert Fenge & Volker Meier, 2006. "Subsidies for Wages and Infrastructure: How to Restrain Undesired Immigration," CESifo Working Paper Series 1741, CESifo.
    5. Sule Akkoyunlu, 2010. "Can trade, aid, foreign direct investments and remittances curb migration from Turkey?," Migration Letters, Migration Letters, vol. 7(2), pages 144-158, October.
    6. Tim Krieger & Steffen Minter, 2007. "Immigration amnesties in the southern EU member states - a challenge for the entire EU?," Working Papers CIE 6, Paderborn University, CIE Center for International Economics.

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    Keywords

    migration; tied foreign aid; welfare state;
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