Crossing the Rio Grande: Migrations, business cycles and the welfare state
AbstractIn this paper we study the macroeconomic effects of an inflow of low-skilled workers into an economy where there is capital accumulation and two types of agents. We find that there are substantial dynamic effects following unexpected migrations with adjustments that resemble those triggered by a sudden disruption of the capital stock. We look at the interrelations between these dynamic effects and three different fiscal systems for the redistribution of income and find that these schemes can change the dynamics and lead to prolonged periods of adjustments. The aggregate welfare implications are sensitive to the welfare system: while there are welfare gains without redistribution, these gains may be turned into costs when the state engages in redistribution.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 248.
Date of creation: Jul 1997
Date of revision: Dec 1997
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Web page: http://www.econ.upf.edu/
Migration; business cycles; heterogeneous agents; the welfare state;
Other versions of this item:
- Canova, Fabio & Ravn, Morten O., 1998. "Crossing the Rio Grande: Migrations, Business Cycles and the Welfare State," CEPR Discussion Papers 2040, C.E.P.R. Discussion Papers.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F20 - International Economics - - International Factor Movements and International Business - - - General
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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