Subsidies for Wages and Infrastructure: How to Restrain Undesired Immigration
This paper investigates regional or international transfers as a means to prevent immigration into unemployment. We analyze a two-country model with free migration in which the rich country is characterized by minimum wage unemployment. Matching grants for investment in infrastructure are superior to wage subsidies because the former instrument leads to a stronger productivity growth in the poor country, reducing both migration flows and unemployment in the rich country. This result is shown to hold for a sufficiently low level of the regional policy budget. It explains the exclusive use of investment subsidies in the EU.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gordon M. Myers & Yorgos Y. Papageorgiou, 1997.
"Immigration Control and the Welfare State,"
97001, University of Waterloo, Department of Economics, revised Jan 1997.
- Boldrin, Michele & Canova, Fabio, 2003. "Regional Policies and EU Enlargement," CEPR Discussion Papers 3744, C.E.P.R. Discussion Papers.
- Fuest, Clemens & Huber, Bernd, 2006.
"Can regional policy in a federation improve economic efficiency?,"
Journal of Public Economics,
Elsevier, vol. 90(3), pages 499-511, February.
- Fuest, Clemens & Huber, Bernd, 2006. "Can regional policy in a federation improve economic efficiency?," Munich Reprints in Economics 20331, University of Munich, Department of Economics.
- FIGUIÈRES , Charles & HINDRIKS, Jean, .
"Matching grants and Ricardian equivalence,"
CORE Discussion Papers RP
-1559, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- FIGUIÈRES, Charles & HINDRIKS, Jean, 2001. "Matching grants and Ricardian equivalence," CORE Discussion Papers 2001048, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Charles Figuieres & Jean Hindriks, 2001. "Matching Grants and Ricardian Equivalence," Working Papers 440, Queen Mary University of London, School of Economics and Finance.
- Bernard G. Funck & Lodovico Pizzati, 2003. "European Integration, Regional Policy, and Growth," World Bank Publications, The World Bank, number 15144, December.
- Martin, Philippe, 1999.
"Public policies, regional inequalities and growth,"
Journal of Public Economics,
Elsevier, vol. 73(1), pages 85-105, July.
- Philippe Martin, 1998. "Can Regional Policies Affect Growth and Geography in Europe?," The World Economy, Wiley Blackwell, vol. 21(6), pages 757-774, 08.
- Panos Hatzipanayotou & Michael S. Michael, 2005. "Migration, Tied Foreign Aid and the Welfare State," CESifo Working Paper Series 1497, CESifo Group Munich.
- Robert Fenge & Matthias Wrede, 2004.
"EU Regional Policy: Vertical Fiscal Externalities And Matching Grants,"
Royal Economic Society Annual Conference 2004
63, Royal Economic Society.
- Robert Fenge & Matthias Wrede, 2004. "EU Regional Policy: Vertical Fiscal Externalities and Matching Grants," CESifo Working Paper Series 1146, CESifo Group Munich.
- Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 205-253, 04.
- Brecher, Richard A. & Choudhri, Ehsan U., 1987. "International migration versus foreign investment in the presence of unemployment," Journal of International Economics, Elsevier, vol. 23(3-4), pages 329-342, November.
- Wellisch, Dietmar & Wildasin, David E., 1996. "Decentralized income redistribution and immigration," European Economic Review, Elsevier, vol. 40(1), pages 187-217, January.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_1741. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)
If references are entirely missing, you can add them using this form.