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Labor market integration of migrants: Hidden costs and benefits in two-tier welfare states

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  • König, Jan
  • Skupnik, Christoph

Abstract

We apply a monopoly trade union model and analyze employment, wage and budgetary effects of (i) an inflow of migrant workers and (ii) an increase in the labor market participation rate of migrants. Per assumption, natives and migrants solely differ with respect to the level of benefit claims in a two-tier welfare system. Furthermore, the labor effects are studied under two types of union behavior. Analyzing the ceteris paribus labor market effects, we identify hidden costs and benefits of intensified integration that emerge from the design of the welfare program. We support previous findings in case of an inflow of migrant workers. More interesting, though, it is shown that a larger share of migrants in the workforce increases (decreases) the employment level, if the union represents (does not represent) migrant workers.

Suggested Citation

  • König, Jan & Skupnik, Christoph, 2012. "Labor market integration of migrants: Hidden costs and benefits in two-tier welfare states," Discussion Papers 2012/5, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:20125
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    More about this item

    Keywords

    migration; welfare state; trade union;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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