Unskilled Migration: A Burden or a Boon for the Welfare State
In a static setup, migration of unskilled labor may be resisted by the entire native-born population because, being relatively low earners, migrants are net beneficiaries of the fiscal system. However, the paper shows that with a pay-as-you-go pension, an important pillar of the welfare state, the dynamics are such that migration is beneficial to low and high income groups and the old and the young, provided that the economy has a good access to the world capital markets. This overall gain holds even though the migrants are net consumers of the pension system; they give to it less than they take from it. The pro-migration feature of the dynamic model is however weakened and possibly overturned when access to the world capital market is limited. In the case of low elasticity of substitution between capital and labor, earnings of native-born may be significantly affected, and the factor price effects can dwarf the effects of the migrants' giving to or taking from the welfare state on the native-born population.
|Date of creation:||Mar 1999|
|Publication status:||published as Razin, Assaf and Efraim Sadka. "Unskilled Migration: A Burden Or A Boon For The Welfare State?," Scandinavian Journal of Economics, 2000, v102(3,Sep), 463-379.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
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.:
- Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 98/61, International Monetary Fund.
- David E. Wildasin, 1994.
"Income Redistribution and Migration,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 27(3), pages 637-656, August.
- Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
- 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.
- George J. Borjas & Stephen J. Trejo, 1990. "Immigrant Participation in the Welfare System," NBER Working Papers 3423, National Bureau of Economic Research, Inc.
- 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.
- Razin, A. & Sadka, E., 1992. "Resisting Migration: Wage Rigidity and Income Redistribution," Papers 28-94, Tel Aviv.
- Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," CEPR Discussion Papers 1091, C.E.P.R. Discussion Papers.
- Richard Hemming, 1998. "Should Public Pensions be Funded?," IMF Working Papers 98/35, International Monetary Fund. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:7013. 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: ()
If references are entirely missing, you can add them using this form.