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The economics of immigration into a welfare state


  • Chand, Sheetal K.
  • Paldam, Martin

    () (Department of Economics Aarhus, Denmark)


The NPV of the income flows associated with an LDC outward migration are calculated for both the immigrant from the LDC and for the host country DC in three different stylized cases: A guest worker society of the Dubai type, an immigrant society of the US type, and a tax-based welfare state with institutions of the Danish type. In the Dubai type case it appears that mutually beneficial decisions can be made, and the same applies to a degree in the US type case. However, in the Danish type evolved welfare case, immigration is an advantage for the immigrant, especially one with less marketable skills and a disadvantage for the natives. This poses an additional threat to the continuation of the traditional type of welfare state.

Suggested Citation

  • Chand, Sheetal K. & Paldam, Martin, "undated". "The economics of immigration into a welfare state," Economics Working Papers 2003-18, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2003-18

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    References listed on IDEAS

    1. Paldam, Martin, 2002. "The cross-country pattern of corruption: economics, culture and the seesaw dynamics," European Journal of Political Economy, Elsevier, vol. 18(2), pages 215-240, June.
    2. Paldam, M. & Svendsen, G.T., 2000. "Missing Social Capital and the Transition in Eastern Europe," Papers 00-5, Aarhus School of Business - Department of Economics.
    3. Borjas, George J, 1999. "Immigration and Welfare Magnets," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 607-637, October.
    4. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    5. Kjetil Storesletten, 2003. "Fiscal Implications of Immigration-A Net Present Value Calculation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 487-506, September.
    6. Blume, Kraen & Verner, Mette, 2007. "Welfare dependency among Danish immigrants," European Journal of Political Economy, Elsevier, vol. 23(2), pages 453-471, June.
    7. Jorgen Hansen & Magnus Lofstrom, 2003. "Immigrant Assimilation and Welfare Participation Do Immigrants Assimilate Into or Out of Welfare?," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
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    Cited by:

    1. Morten Spange, 2004. "Automatic Stabilizers in an Economy with Multiple Shocks," Economics Working Papers 2004-3, Department of Economics and Business Economics, Aarhus University.

    More about this item


    Immigration; welfare state;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration


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