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The Skill Composition of Migration and the Generosity of the Welfare State

Author

Listed:
  • Cohen, Alon
  • Razin, Assaf
  • Sadka, Efraim

Abstract

Skilled migrants typically contribute to the welfare state more than they draw in benefits from it. The opposite holds for unskilled migrants. This suggests that a host country is likely to boost (respectively, curtail) its welfare system when absorbing high-skill (respectively, low-skill) migration. In this paper we first examine this hypothesis in a politico-economic setup. We then confront the prediction of the theory with evidence. In doing so, we reckon with an endogeneity problem that arise because the skill composition of migration is itself affected by the generosity of the welfare state.

Suggested Citation

  • Cohen, Alon & Razin, Assaf & Sadka, Efraim, 2009. "The Skill Composition of Migration and the Generosity of the Welfare State," CEPR Discussion Papers 7185, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7185
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    References listed on IDEAS

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    1. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 300-323, April.
    2. Gordon H. Hanson, 2009. "The Economic Consequences of the International Migration of Labor," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 179-208, May.
    3. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    4. 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.
    5. 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.
    6. Alon Cohen & Assaf Razin, 2008. "The Skill Composition of Immigrants and the Generosity of the Welfare State: Free vs. Policy-Controlled Migration," NBER Working Papers 14459, National Bureau of Economic Research, Inc.
    7. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 1998. "Tax Burden and Migration," Economics Series 59, Institute for Advanced Studies.
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    Citations

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    Cited by:

    1. Assaf Razin & Efraim Sadka, 2010. "Fiscal and Migration Competition," NBER Working Papers 16224, National Bureau of Economic Research, Inc.
    2. Corrado Giulietti & Martin Guzi & Martin Kahanec & Klaus F. Zimmermann, 2013. "Unemployment benefits and immigration: evidence from the EU," International Journal of Manpower, Emerald Group Publishing, vol. 34(1), pages 24-38, March.
    3. Ian Preston, 2014. "The Effect of Immigration on Public Finances," Economic Journal, Royal Economic Society, vol. 124(580), pages 569-592, November.
    4. Giuranno, Michele & Biswas, Rongili, 2015. "Internal migration and public policy," POLIS Working Papers 183, Institute of Public Policy and Public Choice - POLIS.

    More about this item

    Keywords

    skilled vs low skilled migrants; welfare migration;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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