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Migration and income transfers in the presence of labor quality externalities

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Author Info

  • Huizinga, H.P.

    (Tilburg University, Center for Economic Research)

Abstract

In this paper, a worker's productivity is assumed to depend on his own quality and on the average quality of other workers in the same country. The external effects associated with worker quality give rise to increasing returns to average worker quality. As a result, free migration generally reduces world output. Within each country, social benefits that induce low quality workers to leave the labor force can increase national income. Moreover, the operation of such a benefit scheme financed by a proportional income tax can increase everybody's net-of-tax income. The political economy of a system of transfers within a country is analyzed. In particular, the level of transfers is assumed to be determined by popular vote. In this setting, small migration flows can bring about large changes in transfer levels and in labor participation rates. The anticipation of migration generally reduces the level of transfers to the unemployed.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1994-104.

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Date of creation: 1994
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Handle: RePEc:dgr:kubcen:1994104

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Web page: http://center.uvt.nl

Related research

Keywords: Labour Market; Migration; Productivity; National Income; Quality; labour economics;

References

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  1. Musgrave, Richard A, 1969. "Theories of Fiscal Federalism," Public Finance = Finances publiques, , vol. 24(4), pages 521-36.
  2. Crane, Randall, 1992. "Voluntary income redistribution with migration," Journal of Urban Economics, Elsevier, vol. 31(1), pages 84-98, January.
  3. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  4. Arnott, Richard & Rowse, John, 1987. "Peer group effects and educational attainment," Journal of Public Economics, Elsevier, vol. 32(3), pages 287-305, April.
  5. Razin, Assaf & Sadka, Efraim, 1993. "International migration and international trade," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 15, pages 851-887 Elsevier.
  6. Brown, Charles C. & Oates, Wallace E., 1987. "Assistance to the poor in a federal system," Journal of Public Economics, Elsevier, vol. 32(3), pages 307-330, April.
  7. Djajic, Slobodan, 1986. "International migration, remittances and welfare in a dependent economy," Journal of Development Economics, Elsevier, vol. 21(2), pages 229-234, May.
  8. Persson, Torsten & Tabellini, Guido, 1992. "The Politics of 1992: Fiscal Policy and European Integration," Review of Economic Studies, Wiley Blackwell, vol. 59(4), pages 689-701, October.
  9. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August.
  10. Rivera-Batiz, Francisco L., 1982. "International migration, non-traded goods and economic welfare in the source country," Journal of Development Economics, Elsevier, vol. 11(1), pages 81-90, August.
  11. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
  12. Berglas, Eitan & Pines, David, 1981. "Clubs, local public goods and transportation models : A synthesis," Journal of Public Economics, Elsevier, vol. 15(2), pages 141-162, April.
  13. Blank, Rebecca M., 1988. "The effect of welfare and wage levels on the location decisions of female-headed households," Journal of Urban Economics, Elsevier, vol. 24(2), pages 186-211, September.
  14. Wallace E. Oates, 1968. "The Theory of Public Finance in a Federal System," Canadian Journal of Economics, Canadian Economics Association, vol. 1(1), pages 37-54, February.
  15. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
  16. Ethier, Wilfred J, 1986. "Illegal Immigration: The Host-Country Problem," American Economic Review, American Economic Association, vol. 76(1), pages 56-71, March.
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Cited by:
  1. Thomas Nechyba, 1996. "Fiscal federalism and local public finance: A computable general equilibrium (CGE) framework," International Tax and Public Finance, Springer, vol. 3(2), pages 215-231, May.

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