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Labor market integration of migrants: Hidden costs and benefits in two-tier welfare states

  • König, Jan
  • Skupnik, Christoph
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    We apply a monopoly trade union model and analyze employment, wage and budgetary effects of (i) an inflow of migrant workers and (ii) an increase in the labor market participation rate of migrants. Per assumption, natives and migrants solely differ with respect to the level of benefit claims in a two-tier welfare system. Furthermore, the labor effects are studied under two types of union behavior. Analyzing the ceteris paribus labor market effects, we identify hidden costs and benefits of intensified integration that emerge from the design of the welfare program. We support previous findings in case of an inflow of migrant workers. More interesting, though, it is shown that a larger share of migrants in the workforce increases (decreases) the employment level, if the union represents (does not represent) migrant workers.

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    Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2012/5.

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    Date of creation: 2012
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    Handle: RePEc:zbw:fubsbe:20125
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    1. Brecher, Richard A. & Choudhri, Ehsan U., 1987. "International migration versus foreign investment in the presence of unemployment," Journal of International Economics, Elsevier, vol. 23(3-4), pages 329-342, November.
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    3. Razin, Assaf & Sadka, Efraim, 2000. " Unskilled Migration: A Burden or a Boon for the Welfare State?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(3), pages 463-79, June.
    4. Giovanni Facchini & Anna Maria Mayda, 2009. "Does the Welfare State Affect Individual Attitudes toward Immigrants? Evidence across Countries," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 295-314, May.
    5. Hans-Werner Sinn, 2002. "Der neue Systemwettbewerb," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(4), pages 391-407, November.
    6. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
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    11. repec:cup:cbooks:9780521464673 is not listed on IDEAS
    12. Torben M. Andersen, 2003. "European integration and the welfare state," Journal of Population Economics, Springer, vol. 16(1), pages 1-19, 02.
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