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Resisting Migration: The Problems of Wage Rigidity and the Social Burden

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  • Assaf Razin
  • Efraim Sadka

Abstract

Just like any trade activity in well-functioning markets, migration tends to enhance the efficiency of the allocation of resources. With non-distortionary income distribution policy instruments which can compensate losers, migration generates income gains. But the gains tend to be typically rather small. However, when the labor market is malfunctioning and wages are rigid, migration exacerbates imperfections in the market. Consequently, it may lead to losses to the established population which can be quite sizable. Another problem raised by migration is the toll it imposes on the welfare state. Being unable to perfectly exclude migrants from various entitlement programs and public services, the modern welfare state finds it more and more costly to run its various programs. These two economic considerations may help explain why there is strong resistance to migration. Consequently, improvements in functioning of the labor markets (with a possible compensation to wage earners that compete with unskilled migrants) and more selectivity in the scope of and the eligibility for the state entitlement programs may potentially ease, to a large extent, the resistance to migration from the established population.

Suggested Citation

  • Assaf Razin & Efraim Sadka, 1994. "Resisting Migration: The Problems of Wage Rigidity and the Social Burden," NBER Working Papers 4903, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4903
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    References listed on IDEAS

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    1. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-656, August.
    2. Richard Layard, 1990. "Understanding Unemployment," CEP Discussion Papers dp0004, Centre for Economic Performance, LSE.
    3. Saint-Paul, Gilles, 1994. "Unemployment, wage rigidity, and the returns to education," European Economic Review, Elsevier, vol. 38(3-4), pages 535-543, April.
    4. Nickell, Stephen J, 1990. "Unemployment: A Survey," Economic Journal, Royal Economic Society, vol. 100(401), pages 391-439, June.
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    Cited by:

    1. Leach, John, 1996. "Training, migration, and regional income disparities," Journal of Public Economics, Elsevier, vol. 61(3), pages 429-443, September.

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    More about this item

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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