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The Skill Composition of Migration and the Generosity of the Welfare State

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  • Alon Cohen
  • Assaf Razin
  • Efraim Sadka

Abstract

Skilled migrants typically contribute to the welfare state more than they draw in benefits from it. The opposite holds for unskilled migrants. This suggests that a host country is likely to boost (respectively, curtail) its welfare system when absorbing high-skill (respectively, low-skill) migration. In this paper we first examine this hypothesis in a politico-economic setup. We then confront the prediction of the theory with evidence. In doing so, we reckon with an endogeneity problem that arise because the skill composition of migration is itself affected by the generosity of the welfare state.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14738.

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Date of creation: Feb 2009
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Handle: RePEc:nbr:nberwo:14738

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  1. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  2. Gordon H. Hanson, 2008. "The Economic Consequences of the International Migration of Labor," NBER Working Papers 14490, National Bureau of Economic Research, Inc.
  3. Storesletten, Kjetil, 1998. "Sustaining Fiscal Policy Through Immigration," Seminar Papers 664, Stockholm University, Institute for International Economic Studies.
  4. Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economics Impact on the Welfare of the Native-Born Population?," CESifo Working Paper Series 1273, CESifo Group Munich.
  5. Alon Cohen & Assaf Razin, 2008. "The Skill Composition of Immigrants and the Generosity of the Welfare State: Free vs. Policy-Controlled Migration," NBER Working Papers 14459, National Bureau of Economic Research, Inc.
  6. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 1998. "Tax Burden and Migration," Economics Series 59, Institute for Advanced Studies.
  7. Philip Oreopoulos & Alan J. Auerbach, 1999. "Analyzing the Fiscal Impact of U.S. Immigration," American Economic Review, American Economic Association, vol. 89(2), pages 176-180, May.
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Cited by:
  1. Giulietti, Corrado & Guzi, Martin & Kahanec, Martin & Zimmermann, Klaus F., 2011. "Unemployment Benefits and Immigration: Evidence from the EU," IZA Discussion Papers 6075, Institute for the Study of Labor (IZA).

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