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International Migration, Income Taxes and Transfers: A Welfare Analysis

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  • Michael S. Michael

Abstract

An important issue in public policy debates is the effect of international migration on welfare in source and host countries. We address this issue by constructing a general equilibrium model of a two-class source or host country. Each country produces many traded and non-traded goods, uses income taxes and distributes the tax receipts equally to all individuals. The analysis examines the effects of permanent migration on class, and national welfare. We show, among other things, that marginal immigration hurts people already in the country regardless of whether or not non-traded goods exist. The presence of international capital mobility, however, may reverse the above result.

Suggested Citation

  • Michael S. Michael, 2002. "International Migration, Income Taxes and Transfers: A Welfare Analysis," CESifo Working Paper Series 780, CESifo.
    • Handle: RePEc:ces:ceswps:_780
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    References listed on IDEAS

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    1. 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 874-876, November.
    2. Francisco L. Rivera-Batiz, 2018. "International Migration, Non-Traded Goods and Economic Welfare in the Source Country," World Scientific Book Chapters, in: Francisco L Rivera-Batiz (ed.), International and Interregional Migration Theory and Evidence, chapter 5, pages 77-88, World Scientific Publishing Co. Pte. Ltd..
    3. Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," American Economic Review, American Economic Association, vol. 85(2), pages 312-316, May.
    4. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-656, August.
    5. Djajic, Slobodan, 1998. "Emigration and welfare in an economy with foreign capital," Journal of Development Economics, Elsevier, vol. 56(2), pages 433-445, August.
    6. Wellisch, Dietmar & Wildasin, David E., 1996. "Decentralized income redistribution and immigration," European Economic Review, Elsevier, vol. 40(1), pages 187-217, January.
    7. Berry, R Albert & Soligo, Ronald, 1969. "Some Welfare Aspects of International Migration," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 778-794, Sept./Oct.
    8. Wellisch, Dietmar & Walz, Uwe, 1998. "Why do rich countries prefer free trade over free migration? The role of the modern welfare state," European Economic Review, Elsevier, vol. 42(8), pages 1595-1612, September.
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    Cited by:

    1. Stefano Bosi & Eleni Iliopulos & Hubert Jayet, 2011. "Optimal Immigration Policy: When The Public Good Is Rival," The Japanese Economic Review, Japanese Economic Association, vol. 62(4), pages 460-484, December.
    2. Li, Baoxi & Cheng, Shixiong & Xiao, De, 2020. "The impacts of environmental pollution and brain drain on income inequality," China Economic Review, Elsevier, vol. 62(C).
    3. Jakubiak Igor, 2017. "Migration and Welfare Systems – State of the Art and Research Challenges," Central European Economic Journal, Sciendo, vol. 1(48), pages 51-70, November.
    4. Paweł Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," RSCAS Working Papers 2013/79, European University Institute.
    5. Luo, Xiaohu & Caron, Justin & Karplus, Valerie J. & Zhang, Da & Zhang, Xiliang, 2016. "Interprovincial migration and the stringency of energy policy in China," Energy Economics, Elsevier, vol. 58(C), pages 164-173.
    6. Udo Kreickemeier & Michael S. Michael, 2008. "Unemployment and the Immigration Surplus," Discussion Papers 08/31, University of Nottingham, GEP.
    7. Panos Hatzipanayotou & Michael S. Michael, 2005. "Migration, Tied Foreign Aid and the Welfare State," CESifo Working Paper Series 1497, CESifo.
    8. Kaczmarczyk, Pawel, 2015. "Burden or Relief? Fiscal Impacts of Recent Ukrainian Migration to Poland," IZA Discussion Papers 8779, Institute of Labor Economics (IZA).
    9. Michael S. Michael, 2006. "Are Migration Policies that Induce Skilled (Unskilled) Migration Beneficial (Harmful) for the Host Country?," CESifo Working Paper Series 1814, CESifo.
    10. Jean Gabszewicz & Skerdilajda Zanaj, 2020. "Migration: A theoretical comparison on countries’ welfare," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(2), pages 167-183, June.
    11. Kemnitz, Alexander, 2003. "Unemployment, Technology and the Welfare Effects of Immigration," Discussion Papers 611, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.

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    More about this item

    Keywords

    international migration; taxes; transfers; welfare;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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