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Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economics 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.

Suggested Citation

  • Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of its Economics Impact on the Welfare of the Native-Born Population?," CESifo Working Paper Series 1273, CESifo.
  • Handle: RePEc:ces:ceswps:_1273
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    References listed on IDEAS

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    1. Assaf Razin & Efraim Sadka, 2000. "Unskilled Migration: A Burden or a Boon for the Welfare State?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 463-479, September.
    2. Razin, Assaf & Sadka, Efraim, 2000. " Unskilled Migration: A Burden or a Boon for the Welfare State?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 463-479, June.
    3. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 300-323, April.
    4. Razin, Assaf & Sadka, Efraim, 1993. "The Economy of Modern Israel," University of Chicago Press Economics Books, University of Chicago Press, number 9780226705897, Febrero.
    5. Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," American Economic Review, American Economic Association, vol. 85(2), pages 312-316, May.
    6. Philip Oreopoulos & Alan J. Auerbach, 1999. "Analyzing the Fiscal Impact of U.S. Immigration," American Economic Review, American Economic Association, vol. 89(2), pages 176-180, May.
    7. Hans-Werner Sinn, 2004. "EU Enlargement, Migration and the New Constitution," CESifo Working Paper Series 1367, CESifo.
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    Citations

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    Cited by:

    1. Ben-Gad, M., 2014. "On Deficit Bias and Immigration," Working Papers 15/08, Department of Economics, City University London.
    2. Edith Sand & Assaf Razin, 2006. "Immigration and the Survival of Social Security: A Political Economy Model," NBER Working Papers 12800, National Bureau of Economic Research, Inc.
    3. Assaf Razin, 2013. "MIGRATION into the WELFARE STATE: tax and migration competition," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 548-563, August.
    4. Edith Sand & Assaf Razin, 2008. "The Political-Economy Role of the Social Security System in Sustaining Migration," 2008 Meeting Papers 150, Society for Economic Dynamics.
    5. Beine, Michel & Docquier, Frédéric & Özden, Çaglar, 2011. "Diasporas," Journal of Development Economics, Elsevier, vol. 95(1), pages 30-41, May.
    6. Vladimir Gligorov & Rostislav Kapelyushnikov & Andrei Kuznetsov & Leon Podkaminer, 2006. "Monthly Report No. 8-9/2006," wiiw Monthly Reports 2006-08-09, The Vienna Institute for International Economic Studies, wiiw.
    7. Assaf Razin & Efraim Sadka & Benjarong Suwankiri, 2009. "Migration and the welfare state: Dynamic Political-Economy Theory," NBER Working Papers 14784, National Bureau of Economic Research, Inc.
    8. Edith Sand & Assaf Razin, 2007. "The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa)," NBER Working Papers 13598, National Bureau of Economic Research, Inc.
    9. Azarnert, Leonid V., 2010. "Immigration, fertility, and human capital: A model of economic decline of the West," European Journal of Political Economy, Elsevier, vol. 26(4), pages 431-440, December.
    10. Michael Ben-Gad, 2013. "Public Deficit Bias and Immigration," 2013 Meeting Papers 21, Society for Economic Dynamics.
    11. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2004. "EU Merger Control in Differentiated Product Industries," CESifo Working Paper Series 1312, CESifo.
    12. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
    13. O'Rourke, Kevin H. & Sinnott, Richard, 2006. "The determinants of individual attitudes towards immigration," European Journal of Political Economy, Elsevier, vol. 22(4), pages 838-861, December.
    14. Gligorov, Vladimir, 2009. "Mobility and Transition in Integrating Europe," MPRA Paper 19198, University Library of Munich, Germany.
    15. Michel Beine & Frédéric Docquier & Çağlar Özden, 2010. "Diaspora Effects in International Migration: Key Questions and Methodological Issues," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(IV), pages 639-659, December.
    16. Alexander Hijzen & Peter Wright, 2010. "Migration, trade and wages," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1189-1211, September.
    17. Razin, Assaf & Sand, Edith, 2007. "The Role of Immigration in Sustaining the Social Security System: A Political Economy Approach," CEPR Discussion Papers 6302, C.E.P.R. Discussion Papers.
    18. Ben-Gad, M., 2012. "On deficit bias and immigration," Working Papers 12/09, Department of Economics, City University London.
    19. Efraim Sadka & Ben Suwankiri & Assaf Razin, 2010. "The Welfare State and the Skill Mix of Migration: Dynamic Policy Formation," 2010 Meeting Papers 13, Society for Economic Dynamics.
    20. Edith Sand & Assaf Razin, 2007. "The Survival of Social Security and Immigration," 2007 Meeting Papers 16, Society for Economic Dynamics.
    21. Bonin, Holger & Ludwig, Alexander, 2016. "Humanitäre Zuwanderung und die Nachhaltigkeit der deutschen Staatsfinanzen," VfS Annual Conference 2016 (Augsburg): Demographic Change 145609, Verein für Socialpolitik / German Economic Association.
    22. Anastasios Xepapadeas & Athanasios Yannacopoulos & Andreas Ioannidis, 2014. "Spatial Growth: The Distribution of Capital across Locations when Saving Rates are Exogenous," DEOS Working Papers 1412, Athens University of Economics and Business.
    23. Kosta Josifidis & Novica Supic & Emilija Beker Pucar & Sladjana Srdic, 2014. "Labour migration flows: EU8+2 vs EU-15," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(1), pages 41-55, February.
    24. Panos Hatzipanayotou & Michael S. Michael, 2005. "Migration, Tied Foreign Aid and the Welfare State," CESifo Working Paper Series 1497, CESifo.
    25. Michael S. Michael, 2006. "Are Migration Policies that Induce Skilled (Unskilled) Migration Beneficial (Harmful) for the Host Country?," CESifo Working Paper Series 1814, CESifo.

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    More about this item

    Keywords

    migration; welfare state; fiscal burden;
    All these keywords.

    JEL classification:

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

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