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Immigration and the Survival of the Welfare State

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  • Francesc Ortega

Abstract

This paper analyzes the political sustainability of the welfare state in a model where immigration policy is also endogenous. In the model, the skills of the native population are affected by immigration and skill accumulation. Moreover, immigrants affect future policies, once they gain the right to vote. The main finding is that the long-run survival of redistributive policies is linked to an immigration policy specifying both skill and quantity restrictions. In particular, in steady state the unskilled majority admits a limited inflow of unskilled immigrants in order to offset growth in the fraction of skilled voters and maintain a high degree of income redistribution. Interestingly, equilibrium immigration policy shifts from unrestricted skilled immigration, when the country is skill-scarce, to restricted unskilled immigration, as the fraction of native skilled workers increases. The analysis also suggests a new set of variables that may help explain international differences in immigration restrictions.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 71.

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Date of creation: 2005
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Handle: RePEc:red:sed005:71

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Keywords: Immigration; Redistribution; Skills; Mobility;

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  22. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
  23. Francesc Ortega & Ryuichi Tanaka, 2007. "Gender specialization in households: An empirical analysis," Economics Working Papers 1021, Department of Economics and Business, Universitat Pompeu Fabra.
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Cited by:
  1. Blanchard, Emily & Willmann, Gerald, 2011. "Escaping a protectionist rut: Policy mechanisms for trade reform in a democracy," Journal of International Economics, Elsevier, vol. 85(1), pages 72-85, September.
  2. Emily Blanchard & Gerald Willmann, 2007. "Political Stasis or Protectionist Rut? Policy Mechanisms for Trade Reform in a Democracy," CESifo Working Paper Series 2070, CESifo Group Munich.
  3. Paweł Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," RSCAS Working Papers 2013/79, European University Institute.

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