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Migration and Social Replacement Incomes: How to Protect Low-IncomeWorkers in the Industrialized Countries against the Forces of Globalizationand Market Integration

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  • Sinn, Hans-Werner

Abstract

This paper discusses how an industrialized country could defend the wages and social benefits of its unskilled workers against wage competition from immigrants. It shows that fixing social standards harms the workers and that fixing social replacement incomes implies migration into unemployment. Defending wages with replacement incomes brings about first-order efficiency losses that outweigh the budget cost to the government. By contrast, wage subsidies involve much smaller welfare losses. While the exclusion of migrants from a national replacement program does not improve the situation, the (temporary) exclusion of migrants from a national subsidy program makes it possible to avoid a distortion of the migration pattern.

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File URL: http://epub.ub.uni-muenchen.de/937/1/sinn-migration-and-social-replacement.pdf
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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 937.

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Date of creation: May 2005
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Publication status: Published in International Tax and Public Finance 12(2005-05): pp. 375-393
Handle: RePEc:lmu:muenar:937

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Keywords: migration; unemployment; welfare;

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References

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  1. Hans-Werner Sinn & Wolfgang Ochel, 2003. "Social Union, Convergence and Migration," CESifo Working Paper Series 961, CESifo Group Munich.
  2. Charles Brown & Wallace E. Oates, 1985. "Assistance to the Poor in a Federal System," NBER Working Papers 1715, National Bureau of Economic Research, Inc.
  3. Nickell, Stephen J & Symons, James, 1990. "The Real Wage-Employment Relationship in the United States," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 1-15, January.
  4. Richter, Wolfram F., 2004. "Delaying integration of immigrant labor for the purpose of taxation," Journal of Urban Economics, Elsevier, vol. 55(3), pages 597-613, May.
  5. Sinn, Hans-Werner, 2002. "EU enlargement and the future of the welfare state," Munich Reprints in Economics 19736, University of Munich, Department of Economics.
  6. Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March.
  7. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," Munich Reprints in Economics 19846, University of Munich, Department of Economics.
  8. Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  9. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-56, August.
  10. Cremer, Helmuth & Pestieau, Pierre, 1996. "Distributive implications of European integration," European Economic Review, Elsevier, vol. 40(3-5), pages 747-757, April.
  11. Hans-Werner Sinn & Martin Werding, 2001. "Immigration Following EU Eastern Enlargement," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 2(2), pages 40-47, October.
  12. Franz, Wolfgang & Konig, Heinz, 1986. "The Nature and Causes of Unemployment in the Federal Republic of Germany since the 1970s: An Empirical Investigation," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages S219-44, Supplemen.
  13. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
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Citations

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Cited by:
  1. Hans-Werner Sinn, 2007. "The Welfare State and the Forces of Globalization," NBER Working Papers 12946, National Bureau of Economic Research, Inc.
  2. Tito Boeri, 2010. "Immigration to the Land of Redistribution," LEQS – LSE 'Europe in Question' Discussion Paper Series 05, European Institute, LSE.
  3. Hans-Werner Sinn & Christian Holzner & Wolfgang Meister & Wolfgang Ochel & Martin Werding, 2006. "Aktivierende Sozialhilfe 2006 - das Kombilohn-Modell des ifo Instituts," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 59(02), pages 06-27, 01.
  4. Tito Boeri & Herbert Brücker, 2005. "Why are Europeans so tough on migrants?," Economic Policy, CEPR & CES & MSH, vol. 20(44), pages 629-703, October.
  5. Jan Fidrmuc, 2005. "Labor Mobility during Transition: Evidence from the Czech Republic," William Davidson Institute Working Papers Series wp767, William Davidson Institute at the University of Michigan.
  6. Oliver Lorz & Karen Schaefer, 2011. "Temporary immigration visas," International Tax and Public Finance, Springer, vol. 18(3), pages 291-303, June.
  7. Adam, Antonis & Moutos, Thomas, 2011. "A politico-economic analysis of minimum wages and wage subsidies," Economics Letters, Elsevier, vol. 110(3), pages 171-173, March.
  8. Alfons Weichenrieder & Oliver Busch, 2005. "Artificial Time Inconsistency as a Remedy for the Race to the Bottom (new title: Delayed Integration as a Possible Remedy for the Race to the Bottom)," CESifo Working Paper Series 1637, CESifo Group Munich.
  9. Thushyanthan Baskaran & Zohal Hessami, 2010. "Globalization, Redistribution, and the Composition of Public Education Expenditures," CESifo Working Paper Series 2917, CESifo Group Munich.
  10. Weichenrieder, Alfons J. & Busch, Oliver, 2007. "Delayed integration as a possible remedy for the race to the bottom," Journal of Urban Economics, Elsevier, vol. 61(3), pages 565-575, May.
  11. A. Atkinson, 2008. "The economics of the welfare state in today’s world," International Tax and Public Finance, Springer, vol. 15(1), pages 5-17, February.
  12. Lars Calmfors & Giancarlo Corsetti & Michael P. Devereux & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2008. "Chapter 3: The effect of globalisation on Western European jobs: curse or blessing?," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-104, 02.

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