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Migration: a burden or a blessing for natives?

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  • Jean J. Gabszewicz

    ()
    (CORE, Université Catholique de Louvain, Belgique)

  • Skerdilajda Zanaj

    ()
    (CREA, Université de Luxembourg)

Abstract

We analyse the effects of migration on the production of public goods, income taxes, and on the welfare of residents in the sending and in the receiving country. Migration is based on income differences between countries. Different alternative scenarios are considered. In the first, we assume fully flexible wages in both countries and we show that migration is welfare detrimental only for origin country. In the second scenario, wages are rigid. With upward wage rigidity, migration has detrimental effects for natives of the origin country but it brings benefits to the natives of the destination country. Finally, migration can be welfare detrimental for both countries, under downward wage rigidities.

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Bibliographic Info

Paper provided by Center for Research in Economic Analysis, University of Luxembourg in its series CREA Discussion Paper Series with number 14-01.

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Date of creation: 2014
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Handle: RePEc:luc:wpaper:14-01

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Keywords: migration; public goods; income taxes; labor market rigidities;

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References

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  1. David Card, 2009. "Immigration and Inequality," CReAM Discussion Paper Series 0907, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  2. Razin, A. & Sadka, E., 1999. "Unskilled Migration: a Burden or a Boon for the Welfare State?," Papers 8-99, Tel Aviv.
  3. Timothy Miller & Ronald Lee, 2000. "Immigration, Social Security, and Broader Fiscal Impacts," American Economic Review, American Economic Association, vol. 90(2), pages 350-354, May.
  4. Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
  5. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
  6. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
  7. Michael, Michael S., 2003. "International migration, income taxes and transfers: a welfare analysis," Journal of Development Economics, Elsevier, vol. 72(1), pages 401-411, October.
  8. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
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