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The Welfare State and Migration: Coalition-formation dynamics

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  • Assaf Razin

    (Tel Aviv University)

Abstract

We develop a dynamic political-economic theory of welfare state and immigration policies, featuring three distinct voting groups: skilled workers, unskilled workers, and old retirees. The essence of inter- and intra-generational redistribution of a typical welfare system is captured with a proportional tax on labor income to nance a transfer in a balanced-budget manner. We provide an analytical characterization of political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants. When none of these groups enjoy a majority (50 percent of the voters or more), political coalitions will form. With overlapping generations and policy-determined influx of immigrants, the formation of the political coalitions changes over time. These future changes are taken into account when policies are shaped.

Suggested Citation

  • Assaf Razin, 2015. "The Welfare State and Migration: Coalition-formation dynamics," 2015 Meeting Papers 215, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:215
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    References listed on IDEAS

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    Cited by:

    1. Etro, Federico, 2015. "Research in economics and political economy," Research in Economics, Elsevier, vol. 69(3), pages 261-264.

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