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Migration, Social Standards and Replacement Incomes: How to Protect Low-income Workers in the Industrialized Countries Against the Forces of Globalization and Market Integration

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  • Hans-Werner Sinn

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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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10798.

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Date of creation: Sep 2004
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Publication status: published as Sinn, Hans-Werner. "Migration And Social Replacement Incomes: How To Protect Low-Income Workers In The Industrialized Countries Against The Forces Of Globalization And Market Integration," International Tax and Public Finance, 2005, v12(4,Aug), 375-393.
Handle: RePEc:nbr:nberwo:10798

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  1. Wolfram F. Richter, 2002. "Delaying Integration of Immigrant Labor for the Purpose of Taxation," CESifo Working Paper Series 802, CESifo Group Munich.
  2. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," Munich Reprints in Economics 19846, University of Munich, Department of Economics.
  3. Cremer, H. & Pestieau, P., . "Distributive implications of European integration," CORE Discussion Papers RP -1237, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Hans-Werner Sinn, 2000. "EU Enlargement and the Future of the Welfare State," CESifo Working Paper Series 307, CESifo Group Munich.
  5. 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.
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Cited by:
  1. Gligorov, Vladimir, 2009. "Mobility and Transition in Integrating Europe," MPRA Paper 19198, University Library of Munich, Germany.
  2. Arye Hillman, 2007. "Economic and security consequences of supreme values," Public Choice, Springer, vol. 131(3), pages 259-280, June.

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