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The Welfare State and Migration: A Dynamic Analysis of Political Coalitions

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  • Assaf Razin
  • Efraim Sadka
  • Benjarong Suwankiri

Abstract

We develop a dynamic political-economic theory of welfare state and immigration policies, featuring three distinct voting groups: skilled workers, unskilled workers, and old retirees. The essence of inter- and intra-generational redistribution of a typical welfare system is captured with a proportional tax on labor income to finance a transfer in a balanced-budget manner. We characterize political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants. When none of these groups enjoy a majority (50 percent of the voters or more), political coalitions will form. With overlapping generations and policy-determined influx of immigrants, the formation of the political coalitions changes over time. These future changes are taken into account when policies are shaped. The paper characterizes the evolution of the political coalitions that implement welfare state and migration policies.

Suggested Citation

  • Assaf Razin & Efraim Sadka & Benjarong Suwankiri, 2014. "The Welfare State and Migration: A Dynamic Analysis of Political Coalitions," NBER Working Papers 20806, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20806
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    Cited by:

    1. Łukasz Byra, 2023. "Two possible reasons behind the reluctance of low-skilled workers to migrate to generous welfare states," Working Papers 2023-24, Faculty of Economic Sciences, University of Warsaw.
    2. Hur, Jinwook, 2022. "Political Economy of Immigration and Fiscal Sustainability," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 44(1), pages 1-47.
    3. 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.
    4. Germán Gieczewski, 2021. "Policy Persistence and Drift in Organizations," Econometrica, Econometric Society, vol. 89(1), pages 251-279, January.
    5. Valerio Dotti, 2022. "No Country for Young People? The Rise of Anti-Immigration Politics in Ageing Societies," Working Papers 2022:14, Department of Economics, University of Venice "Ca' Foscari".
    6. Christina Felfe de Ormeño & Helmut Rainer, 2020. "Intended and Unintended Consequences of Birthright Citizenship," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 21(04), pages 14-18, November.
    7. Etro, Federico, 2015. "Research in economics and political economy," Research in Economics, Elsevier, vol. 69(3), pages 261-264.
    8. Carmen Beviá & Luis Corchón & Antonio Romero-Medina, 2017. "Relinquishing power, exploitation and political unemployment in democratic organizations," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(3), pages 735-753, December.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H0 - Public Economics - - General

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