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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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Author Info
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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Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 937.

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Date of creation: May 2005
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Handle: RePEc:lmu:muenec:937

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Related research
Keywords: migration; unemployment; welfare;

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Find related papers by 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 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, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers

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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)
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  2. 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. [Downloadable!] (restricted)
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  3. Sinn, Hans-Werner & Ochel, Wolfgang, 2003. "Social Union, Convergence and Migration," Discussion Papers in Economics 948, University of Munich, Department of Economics. [Downloadable!]
  4. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May. [Downloadable!] (restricted)
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  5. Jan K. Brueckner, 2000. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  6. Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
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  8. 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. [Downloadable!] (restricted)
  9. Hans-Werner Sinn & Wolfgang Ochel, 2003. "Social Union, Convergence and Migration," Journal of Common Market Studies, Blackwell Publishing, vol. 41(5), pages 869-896, December. [Downloadable!] (restricted)
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  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 104-15, February. [Downloadable!] (restricted)
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  11. Cremer, Helmuth & Pestieau, Pierre, 1996. "Distributive implications of European integration," European Economic Review, Elsevier, vol. 40(3-5), pages 747-757, April. [Downloadable!] (restricted)
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