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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.

Suggested Citation

  • Sinn, Hans-Werner, 2005. "Migration and Social Replacement Incomes: How to Protect Low-IncomeWorkers in the Industrialized Countries against the Forces of Globalizationand Market Integration," Munich Reprints in Economics 937, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:937
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    References listed on IDEAS

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    1. Hans–Werner Sinn, 2002. "EU Enlargement and the Future of the Welfare State," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(1), pages 104-115, February.
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    8. Hans-Werner Sinn & Gebhard Flaig & Martin Werding & Sonja Munz & Nicola Düll & Herbert Hofmann, 2001. "EU enlargement and labour-force migration: Proposals for a gradual convergence of labour markets," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 2.
    9. 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 219-244, Supplemen.
    10. Sinn, Hans-Werner, 2002. "EU Enlargement and the Future of the Welfare State," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(1), pages 104-115, February.
    11. 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.
    12. Hans-Werner Sinn & Martin Werding, 2001. "Immigration Following EU Eastern Enlargement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 2(02), pages 40-47, October.
    13. Hans‐Werner Sinn & Wolfgang Ochel, 2003. "Social Union, Convergence and Migration," Journal of Common Market Studies, Wiley Blackwell, vol. 41(5), pages 869-896, December.
    14. Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March.
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    Cited by:

    1. 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.
    2. Oliver Lorz & Karen Schaefer, 2011. "Temporary immigration visas," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(3), pages 291-303, June.
    3. Fidrmuc, Jan, 2004. "Labor mobility during transition : evidence from the Czech Republic," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 37(4), pages 437-450.
    4. Alfons J. Weichenrieder & Oliver Busch & Alfons Weichenrieder, 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.
    5. A. Atkinson, 2008. "The economics of the welfare state in today’s world," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(1), pages 5-17, February.
    6. Hans-Werner Sinn & Christian Holzner & Wolfgang Meister & Wolfgang Ochel & Martin Werding, 2006. "Activating social welfare 2006 - the combi-wage model of the Ifo Institute," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(02), pages 06-27, January.
    7. Pakhomov, Alexander (Пахомов, Александр) & Makarov, Andrei (Макаров, Андрей) & Bagdasaryan, Kniaz (Багдасарян, Княз), 2018. "ASEAN Countries in Russia's Foreign Economic Policy at the Present Stage: New Opportunities and Limitations [Государства Асеан Во Внешнеэкономической Политике России На Современном Этапе: Новые Воз," Working Papers 041832, Russian Presidential Academy of National Economy and Public Administration.
    8. Tito Boeri, 2010. "Immigration to the Land of Redistribution," Economica, London School of Economics and Political Science, vol. 77(308), pages 651-687, October.
    9. Hans-Werner Sinn, 2007. "The Welfare State and the Forces of Globalization," NBER Working Papers 12946, National Bureau of Economic Research, Inc.
    10. Marcel Thum, 2018. "Vorstellung der Thesen von Hans-Werner Sinn: Offene Grenzen und generöser Sozialstaat – Die Flüchtlings- und Migrationskrise," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(18), pages 26-30, September.
    11. Michele Battisti & Gabriel Felbermayr & Panu Poutvaara, 2015. "Immigration: How Does it Benefit the Native Population?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(18), September.
    12. Fidrmuc, Jan, 2004. "Labor mobility during transition : evidence from the Czech Republic," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 37(4), pages 437-450.
    13. Arye Hillman, 2007. "Economic and security consequences of supreme values," Public Choice, Springer, vol. 131(3), pages 259-280, June.
    14. 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.
    15. Thushyanthan Baskaran & Zohal Hessami, 2010. "Globalization, Redistribution, and the Composition of Public Education Expenditures," CESifo Working Paper Series 2917, CESifo.
    16. 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, vol. 0, pages 71-104, February.

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    More about this item

    Keywords

    migration; unemployment; welfare;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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