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Unskilled Migration: a Burden or a Boon for the Welfare State?

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Author Info
Razin, A.
Sadka, E.

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Abstract

Being relatively low earners, migrants are net beneficiaries of the welfare state. Therefore, in a static setup migration may be resisted by the entire native-born population. However, it is shown that in a dynamic setup with a pension system which is an important pillar of any welfare state, migration is beneficial to all income (high and low) and age (old and young) groups when the economy has a good access to international capital markets. The pro-migration feature of the dynamic model is weakened and possibly overturned when the economy does not have good access to the world capital markets. In this case, to the extent that factor prices are significantly affected by migration because of low substitution between labor and capital, low-skill native born and possibly also high-skill native born may lose.

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Publisher Info
Paper provided by Tel Aviv in its series Papers with number 8-99.

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Length: 23 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:teavfo:8-99

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Related research
Keywords: MIGRATION ; PENSION FUNDS ; LABOUR MARKET;

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Find related papers by JEL classification:
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
H2 - Public Economics - - Taxation, Subsidies, and Revenue
J1 - Labor and Demographic Economics - - Demographic Economics

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-56, August. [Downloadable!] (restricted)
    Other versions:
  2. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 98/61, International Monetary Fund.
  3. Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," American Economic Review, American Economic Association, vol. 85(2), pages 312-16, May. [Downloadable!] (restricted)
    Other versions:
  4. George J. Borjas & Stephen J. Trejo, 1991. "Immigrant Participation in the Welfare System," NBER Working Papers 3423, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Richard Hemming, 1998. "Should Public Pensions be Funded?," IMF Working Papers 98/35, International Monetary Fund.
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