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Mass Migration, Unions, and Fiscal Migration Policy


  • Gehrig, Anette
  • Schmidt, Christoph M
  • Zimmermann, Klaus F


Standard economic reasoning based on competitive labour markets suggests that migrant inflow will unambiguously lead to allocative gains for the native population of a host country. Even abstracting from the costs of integration, however, this result is not robust when important labour market imperfections are considered. Much of the migration literature focuses on the determination of the size of the immigration flow given a fixed minimum wage and the level of unemployment in the destination area. By contrast, this paper concentrates on the mechanism of wage determination in the receiving country. The model depicts a situation where one large monopoly union acts on behalf of the whole workforce. Depending on the arguments of the union objective function and on whether labour is heterogeneous, an optimal size of immigration may exist. These considerations could form the basis for welfare-improving government policies.

Suggested Citation

  • Gehrig, Anette & Schmidt, Christoph M & Zimmermann, Klaus F, 1992. "Mass Migration, Unions, and Fiscal Migration Policy," CEPR Discussion Papers 727, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:727

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    References listed on IDEAS

    1. Grandmont, Jean-Michel, 1978. "Intermediate Preferences and the Majority Rule," Econometrica, Econometric Society, vol. 46(2), pages 317-330, March.
    2. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    3. Bureau, Dominique & Champsaur, Paul, 1992. "Fiscal Federalism and European Economic Unification," American Economic Review, American Economic Association, vol. 82(2), pages 88-92, May.
    4. Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," American Economic Review, American Economic Association, vol. 80(1), pages 37-49, March.
    5. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
    6. Jewitt, Ian, 1988. "Justifying the First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 56(5), pages 1177-1190, September.
    7. Wildasin, David E, 1990. "Budgetary Pressures in the EEC: A Fiscal Federalism Perspective," American Economic Review, American Economic Association, vol. 80(2), pages 69-74, May.
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    More about this item


    Fiscal Migration Policy; Heterogeneous Labour; Migration; Unions;

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers


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