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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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  1. Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of Its Economic Impact on the Welfare of the Native Born Population?," NBER Working Papers 10682, National Bureau of Economic Research, Inc.
  2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  3. Phillip B. Levine & David J. Zimmerman, 1995. "An Empirical Analysis of the Welfare Magnet Debate Using the NLSY," NBER Working Papers 5264, National Bureau of Economic Research, Inc.
  4. Assaf Razin & Efraim Sadka & Benjarong Suwankiri, 2010. "Migration and the Welfare State: Dynamic Political-Economy Theory," CESifo Working Paper Series 2991, CESifo Group Munich.
  5. Barry Chiswick & Timothy J.. Hatton, 2003. "International Migration and the Integration of Labor Markets," NBER Chapters, in: Globalization in Historical Perspective, pages 65-120 National Bureau of Economic Research, Inc.
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  8. Galasso, Vincenzo & Profeta, Paola, 2002. "The political economy of social security: a survey," European Journal of Political Economy, Elsevier, vol. 18(1), pages 1-29, March.
  9. Mateos-Planas, Xavier, 2009. "Demographics and the politics of capital taxation in a life-cycle economy," Discussion Paper Series In Economics And Econometrics 0909, Economics Division, School of Social Sciences, University of Southampton.
  10. Facchini, Giovanni & Willmann, Gerald, 2005. "The political economy of international factor mobility," Journal of International Economics, Elsevier, vol. 67(1), pages 201-219, September.
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  12. Gordon H. Hanson & Kenneth Scheve & Matthew J. Slaughter, 2007. "Public Finance And Individual Preferences Over Globalization Strategies," Economics and Politics, Wiley Blackwell, vol. 19(1), pages 1-33, 03.
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  26. Terra McKinnish, 2005. "Importing the Poor: Welfare Magnetism and Cross-Border Welfare Migration," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  27. Krieger, Tim, 2003. " Voting on Low-Skill Immigration under Different Pension Regimes," Public Choice, Springer, vol. 117(1-2), pages 51-78, October.
  28. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, vol. 74(1), pages 141-150, October.
  29. Walker, J.R., 1994. "Migration Among Low-Income Households: Helpmg the Witch Doctors Reach Consensus," Working papers 9423, Wisconsin Madison - Social Systems.
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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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