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Migration and Social Insurance

  • Cremer, Helmuth
  • Goulão, Catarina

A wide variety of social protection systems coexist within the EU. Some member states provide social insurance that is of Beveridgean inspiration (with universal and more or less flat benefits), while others offer a system that is mainly Bismarckian (with benefits related to past contributions). Labor mobility raises concerns about the sustainability of the most generous and redistributive (Beveridgean) insurance systems. We address this issue in a two-country setting, where individuals differ in mobility cost (attachment to their native country). A Bismarckian insurance system is not affected by migration while a Beveridgean one is. Our results suggest that the race-to-the-bottom affecting tax rates may be more important under Beveridge-Beveridge competition than under Beveridge-Bismarck competition. Finally, we study the strategic choice of the type of social protection. We show that Bismarckian governments may find it beneficial to adopt a Beveridgean insurance system.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 11-217.

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Date of creation: Jan 2011
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Publication status: Published in Louvain Economic Review - Recherches Economiques de Louvain, vol.�80, 2014, p.�5-29.
Handle: RePEc:tse:wpaper:24008
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  1. Breyer, Friedrich & Kolmar, Martin, 2002. "Are national pension systems efficient if labor is (im)perfectly mobile?," Journal of Public Economics, Elsevier, vol. 83(3), pages 347-374, March.
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  13. David Wildasin, 2001. "Fiscal Competition in Space and Time," Public Economics 0112004, EconWPA.
  14. Dominique BUREAU & Cécile RICHARD, 1997. "Public Insurance and Mobility: An Exploratory Analysis in the Context of European Economic Unification," Annales d'Economie et de Statistique, ENSAE, issue 45, pages 275-290.
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