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Migration, Redistribution and the Universal Welfare Model

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  • Andersen, Torben M.

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    (Aarhus University)

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    Abstract

    The universal Scandinavian welfare model offers generous tax financed social benefits. The scheme is associated with workfare elements as a targeting device to direct benefits to those considered deserving. Thereby social insurance and egalitarian outcomes are achieved while work incentives and thus a high employment rate crucial for the financial viability of the model are maintained. The scope for this policy may depend critically on the characteristics of the population (abilities and preferences) and thus be significantly affected by immigration affecting the distribution of characteristics, especially if the model attracts immigrants with particular characteristics. The paper develops a simple model capable of capturing the rationale and essence of the above-mentioned redistribution model and considers its sensitivity and robustness to immigration, which may change the composition of the population in the ability and/or preference dimension.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6665.

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    Length: 27 pages
    Date of creation: Jun 2012
    Date of revision:
    Handle: RePEc:iza:izadps:dp6665

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    Keywords: work incentives; active labour market policy; redistribution;

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    1. Nicole M Fortin, 2005. "Gender Role Attitudes and the Labour-market Outcomes of Women across OECD Countries," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 21(3), pages 416-438, Autumn.
    2. Torben Andersen & Michael Svarer, 2008. "The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market," CESifo Working Paper Series 2267, CESifo Group Munich.
    3. Assaf Razin & Jackline Wahba, 2011. "Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity," NBER Working Papers 17515, National Bureau of Economic Research, Inc.
    4. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, Elsevier, vol. 52(7), pages 1160-1186, October.
    5. Christian Holzner & Volker Meier & Martin Werding, 2006. "Workfare, Monitoring, and Efficiency Wages," CESifo Working Paper Series 1749, CESifo Group Munich.
    6. Giulietti, Corrado & Guzi, Martin & Kahanec, Martin & Zimmermann, Klaus F, 2011. "Unemployment Benefits and Immigration: Evidence from the EU," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8672, C.E.P.R. Discussion Papers.
    7. Brett, Craig, 1998. "Who Should Be on Workfare? The Use of Work Requirements as Part of an Optimal Tax Mix," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 607-22, October.
    8. Claus Thustrup Kreiner & Torben Tranas, 2005. "Optimal Workfare with Voluntary and Involuntary Unemployment," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 107(3), pages 459-474, 09.
    9. Amelie Constant & Martin Kahanec & Ulf Rinne & Klaus F. Zimmermann, 2009. "Ethnicity, Job Search and Labor Market Reintegration of the Unemployed," Discussion Papers of DIW Berlin 963, DIW Berlin, German Institute for Economic Research.
    10. George J. Borjas, 1998. "Immigration and Welfare Magnets," NBER Working Papers 6813, National Bureau of Economic Research, Inc.
    11. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 249-61, March.
    12. Katherine Cuff, 2000. "Optimality of workfare with heterogeneous preferences," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 33(1), pages 149-174, February.
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