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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.

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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Bibliographic 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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Postal: Israel TEL-AVIV UNIVERSITY, THE FOERDER INSTITUTE FOR ECONOMIC RESEARCH, RAMAT AVIV 69 978 TEL AVIV ISRAEL.
Phone: 972-3-640-9255
Fax: 972-3-640-5815
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Web page: http://econ.tau.ac.il/research/foerder.asp
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Keywords: MIGRATION ; PENSION FUNDS ; LABOUR MARKET;

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References

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  1. George J. Borjas & Stephen J. Trejo, 1991. "Immigrant participation in the welfare system," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 44(2), pages 195-211, January.
  2. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 98/61, International Monetary Fund.
  3. Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
  4. Razin, A. & Sadka, E., 1992. "Resisting Migration: Wage Rigidity and Income Redistribution," Papers 28-94, Tel Aviv.
  5. Richard Hemming, 1998. "Should Public Pensions be Funded?," IMF Working Papers 98/35, International Monetary Fund.
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