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Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economic Impact on the Welfare of the Native-Born Population?

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  • Assaf Razin
  • Efraim Sadka

Abstract

Migration of young workers (as distinct from retirees), even when driven in by the generosity of the welfare state, slows down the trend of increasing dependency ratio. But, even though low-skill migration improves the dependency ratio, it nevertheless burdens the welfare state. Recent studies by Smith and Edmonston (1977), and Sinn et al. (2003) comprehensively estimate the fiscal burden that low-skill migration imposes on the fiscal system. However an important message of this paper is that in an infinite-horizon set-up, one cannot fully grasp the implications of migration for the welfare state, just by looking at the net fiscal burden that migrants impose on the fiscal system. In an infinite-horizon, overlapping generations economy, this net burden, could change to net gain to the native born population. (JEL F22, H3, J10)

Suggested Citation

  • Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economic Impact on the Welfare of the Native-Born Population?," CESifo Economic Studies, CESifo Group, vol. 50(4), pages 709-716.
    • Handle: RePEc:oup:cesifo:v:50:y:2004:i:4:p:709-716.
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    File URL: http://hdl.handle.net/10.1093/cesifo/50.4.709
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    JEL classification:

    • H00 - Public Economics - - General - - - General

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