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Migration, Tied Foreign Aid and the Welfare State

  • Panos Hatzipanayotou
  • Michael S. Michael

In this paper we highlight aspects related to the links between international migration, foreign tied aid and the welfare state. We model migration as a costly movement from an aid-recipient developing country with low income, poor infrastructure, and no welfare system, towards a rich donor, developed country with a well-developed welfare system. Within this model we find, among other things, that the best response of the developed donor country is to increase aid as the co-financing rate by the recipient country increases. When the immigration cost decreases, e.g. due to greater economic integration between the two countries, it is beneficial for the donor country to increase aid.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1497.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1497
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  1. Bauer, Thomas K. & Kunze, Astrid, 2003. "The Demand for High-skilled Worker and Immigration Policy," RWI Discussion Papers 11, RWI - Leibniz-Institut für Wirtschaftsforschung.
  2. Michael S. Michael & Panos Hatzipanayotou, 2000. "Welfare Effects of Migration in Societies with Indirect Taxes, Income Transfers and Public Good Provision," CESifo Working Paper Series 347, CESifo Group Munich.
  3. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 2002. "Tax burden and migration: a political economy theory and evidence," Journal of Public Economics, Elsevier, vol. 85(2), pages 167-190, August.
  4. Lahiri, Sajal & Raimondos-Moller, Paschalis, 1994. "Competition for Aid and Trade Policy," Economics Discussion Papers 10030, University of Essex, Department of Economics.
  5. David E. Wildasin, 2004. "Economic Integration and the Welfare State," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(3), pages 19-26, 09.
  6. Myers, Gordon M. & Papageorgiou, Yorgos Y., 2000. "Immigration control and the welfare state," Journal of Public Economics, Elsevier, vol. 75(2), pages 183-207, February.
  7. Epstein, Gil S. & Hillman, Arye L., 2003. "Unemployed immigrants and voter sentiment in the welfare state," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1641-1655, August.
  8. Feehan, James P., 1992. "The optimal revenue tariff for public input provision," Journal of Development Economics, Elsevier, vol. 38(1), pages 221-231, January.
  9. Chi-Chur Chao & Eden S.H. Yu, 2002. "Immigration and Welfare for the Host Economy with Imperfect Competition," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 327-338.
  10. Michael S. Michael, 2002. "International Migration, Income Taxes and Transfers: A Welfare Analysis," CESifo Working Paper Series 780, CESifo Group Munich.
  11. Kenzo Abe, 1990. "A Public Input as a Determinant of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 23(2), pages 400-407, May.
  12. M. G. Quibria, 1988. "On Generalizing the Economic Analysis of International Migration: A Note," Canadian Journal of Economics, Canadian Economics Association, vol. 21(4), pages 874-76, November.
  13. Hans-Werner Sinn, 2004. "Social Union, Migration and the Constitution: Integration at Risk," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(3), pages 04-11, 09.
  14. 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, vol. 50(4), pages 709-716.
  15. William Carrington & Enrica Detragiache, 1998. "How Big is the Brain Drain?," IMF Working Papers 98/102, International Monetary Fund.
  16. Kenji Kondoh, 1997. "Permanent Migrants And Cross-Border Workers -The Effects On The Host Country-," Departmental Working Papers 1997-01, McGill University, Department of Economics.
  17. Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
  18. Agnar Sandmo & David Wildasin, 1999. "Taxation, Migration, and Pollution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(1), pages 39-59, February.
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