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Migration into the Welfare State: Tax and Migration Competition

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  • Assaf Razin

Abstract

This paper provides overview of recent work on migration and welfare state tax policies: 1. I survey the literature on the tax burden of migration. 2. I empirically identify the differential effect of the generosity of the welfare state on the skill composition of immigrants across the two groups (the "free-migration" group and the "policy-restricted migration" group) in an unbiased way. 3. I outline the implications of the tax burden of migration to tax competition within a union, facing migration from the rest of the world.Each host country in a competitive regime balances on the margin these gains and losses from migration. In doing so, each country takes the well-being of the migrants as given. Therefore, It ignores the fact that a tax-migration policy that admits an extra migrant raises the well-being that must be accorded to migrants by all the other host countries, in order to elicit the migrant to come in; and more capital income leaks, through capital taxation, to immigrants.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19346.

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Date of creation: Aug 2013
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Publication status: published as Assaf Razin, 2013. "MIGRATION into the WELFARE STATE: tax and migration competition," International Tax and Public Finance, Springer, vol. 20(4), pages 548-563, August.
Handle: RePEc:nbr:nberwo:19346

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Cited by:
  1. Jean Gabszewicz & Ornella Tarola & Skerdilajda Zanaj, 2013. "Migration, wages and fiscal competition," CREA Discussion Paper Series 13-19, Center for Research in Economic Analysis, University of Luxembourg.

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