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Unskilled Migration: a Burden or a Boon for the Welfare State?

Author

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  • Razin, A.
  • Sadka, E.

Abstract

Being relatively low earners, migrants are net beneficiaries of the welfare state. Therefore, in a static setup migration may be resisted by the entire native-born population. However, it is shown that in a dynamic setup with a pension system which is an important pillar of any welfare state, migration is beneficial to all income (high and low) and age (old and young) groups when the economy has a good access to international capital markets. The pro-migration feature of the dynamic model is weakened and possibly overturned when the economy does not have good access to the world capital markets. In this case, to the extent that factor prices are significantly affected by migration because of low substitution between labor and capital, low-skill native born and possibly also high-skill native born may lose.

Suggested Citation

  • Razin, A. & Sadka, E., 1999. "Unskilled Migration: a Burden or a Boon for the Welfare State?," Papers 8-99, Tel Aviv.
  • Handle: RePEc:fth:teavfo:8-99
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    References listed on IDEAS

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    1. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 1998/061, International Monetary Fund.
    2. Richard Hemming, 1998. "Should Public Pensions be Funded?," IMF Working Papers 1998/035, International Monetary Fund.
    3. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-656, August.
    4. George J. Borjas & Stephen J. Trejo, 1991. "Immigrant Participation in the Welfare System," ILR Review, Cornell University, ILR School, vol. 44(2), pages 195-211, January.
    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.
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    Cited by:

    1. Karin Mayr, 2003. "Immigration and Majority Voting on Income Redistriubtion-Is there a Case for Opposition from Natives?," Economics working papers 2003-08, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Rojas, Juan A., 2002. "Immigration and the pension system in Spain," UC3M Working papers. Economics we023916, Universidad Carlos III de Madrid. Departamento de Economía.
    3. 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.
    4. Jean-Marie Grether & Jaime de Melo & Tobias Müller, 2015. "The Political Economy of International Migration in a Ricardo–Viner Model," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 17, pages 411-437, World Scientific Publishing Co. Pte. Ltd..
    5. 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.
    6. Mario Izquierdo & Juan Jimeno & Juan Rojas, 2010. "On the aggregate effects of immigration in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(4), pages 409-432, September.
    7. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, vol. 74(1), pages 141-150, October.
    8. Jinno, Masatoshi & Yasuoka, Masaya, 2021. "Endogenous fertility and unemployment -Considering the effects of immigrants through school system," MPRA Paper 106379, University Library of Munich, Germany.
    9. Jane Sneddon Little & Robert K. Triest, 2002. "The impact of demographic change on U. S. labor markets," New England Economic Review, Federal Reserve Bank of Boston, issue Q 1, pages 47-68.
    10. Igor Fedotenkov & Irena Mikolajun, 2013. "Migration and Welfare," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(1), pages 71-73, February.
    11. Leers, Theo & Meijdam, Lex & Verbon, Harrie A. A., 2004. "Ageing, migration and endogenous public pensions," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 131-159, January.
    12. Casarico, Alessandra & Devillanova, Carlo, 2003. "Social security and migration with endogenous skill upgrading," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 773-797, March.
    13. Doris Geide-Stevenson & Mun S. Ho, 2004. "International labor migration and social security: Analysis of the transition path," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(3), pages 535-551, August.
    14. Assaf Razin & Jackline Wahba, 2015. "Welfare Magnet Hypothesis, Fiscal Burden, and Immigration Skill Selectivity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(2), pages 369-402, April.
    15. Hisahiro Naito, 2015. "Immigration as a Policy Tool for the Double Burden Problem of Prefunding Pay-as-you-go Social Security System," Tsukuba Economics Working Papers 2015-002, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
    16. Clinton Lively, 2001. "Merrill Lynch & Co.: process risk management program," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
    17. repec:kap:iaecre:v:19:y:2013:i:1:p:71-73 is not listed on IDEAS
    18. Gligorov, Vladimir, 2009. "Mobility and Transition in Integrating Europe," MPRA Paper 19198, University Library of Munich, Germany.
    19. Gonnot, Jérôme, 2020. "Taxation with Representation: The Political Economy of Foreigners’ Voting Rights," TSE Working Papers 20-1077, Toulouse School of Economics (TSE).
    20. Dotti, Valerio, 2020. "No Country for Young People? The Rise of Anti-immigration Populism in Ageing Societies," MPRA Paper 100226, University Library of Munich, Germany.

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    More about this item

    Keywords

    MIGRATION ; PENSION FUNDS ; LABOUR MARKET;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J1 - Labor and Demographic Economics - - Demographic Economics

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