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Migration and Social Insurance

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  • Cremer, Helmuth
  • Goulão, Catarina

Abstract

A wide variety of social protection systems coexist within the EU. Some member states provide social insurance that is of Beveridgean inspiration (with universal and more or less flat benefits), while others offer a system that is mainly Bismarckian (with benefits related to past contributions). Labor mobility raises concerns about the sustainability of the most generous and redistributive (Beveridgean) insurance systems. We address this issue in a two-country setting, where individuals differ in mobility cost (attachment to their native country). A Bismarckian insurance system is not affected by migration while a Beveridgean one is. Our results suggest that the race-to-the-bottom affecting tax rates may be more important under Beveridge-Beveridge competition than under Beveridge-Bismarck competition. Finally, we study the strategic choice of the type of social protection. We show that Bismarckian governments may find it beneficial to adopt a Beveridgean insurance system.

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Bibliographic Info

Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 11-217.

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Date of creation: Jan 2011
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Publication status: Published in Louvain Economic Review - Recherches Economiques de Louvain.
Handle: RePEc:tse:wpaper:24008

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  1. Hans-Werner Sinn, 1991. "Tax Harmonization and Tax Competition in Europe," NBER Working Papers 3248, National Bureau of Economic Research, Inc.
  2. Cremer, Helmuth & Pestieau, Pierre, 2003. "Social insurance competition between Bismarck and Beveridge," Journal of Urban Economics, Elsevier, vol. 54(1), pages 181-196, July.
  3. Lejour, Arjan M & Verbon, Harrie A A, 1994. " Labour Mobility and Decision Making on Social Insurance in an Integrated Market," Public Choice, Springer, vol. 79(1-2), pages 161-85, April.
  4. Leite-Monteiro, Manuel, 1997. "Redistributive policy with labour mobility across countries," Journal of Public Economics, Elsevier, vol. 65(2), pages 229-244, August.
  5. Hindriks, Jean, 1999. "The consequences of labour mobility for redistribution: tax vs. transfer competition," Journal of Public Economics, Elsevier, vol. 74(2), pages 215-234, November.
  6. Panu Poutvaara, 2005. "Social Security Incentives, Human Capital Investment and Mobility of Labor," CESifo Working Paper Series 1544, CESifo Group Munich.
  7. Cremer, Helmuth & Pestieau, Pierre, 1998. "Social insurance, majority voting and labor mobility," Journal of Public Economics, Elsevier, vol. 68(3), pages 397-420, June.
  8. Stéphane Rossignol & Emmanuelle Taugourdeau, 2006. "Asymmetric social protection systems with migration," Journal of Population Economics, Springer, vol. 19(3), pages 481-505, July.
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Cited by:
  1. Koethenbuerger, Marko, 2014. "Competition for migrants in a federation: Tax or transfer competition?," Journal of Urban Economics, Elsevier, vol. 80(C), pages 110-118.

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