Migration and the Welfare State: A Dynamic Political-Economy Theory / Assaf Razin, Efraim Sadka, Benjarong Suwankiri.

Format:

Book

Author/Creator:

Razin, Assaf.

Contributor:

National Bureau of Economic Research.

Sadka, Efraim.

Suwankiri, Benjarong.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15597.

NBER working paper series no. w15597

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Migration and the welfare state

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

We develop a dynamic politico-economic theory of welfare state and immigration policies, featuring three groups of voters: skilled workers, unskilled workers, and old retirees. The welfare-state is modeled by a proportional tax on labor income to finance a demogrant in a balanced-budget manner to capture the essence of inter- and intra- generational redistribution of a typical welfare system. Migrants arrive when young and their birth rate exceeds the native-born birth rate. We characterize political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants, in terms of demographic and labor productivity characteristics. We find that political coalitions will form among skilled and unskilled voters or among unskilled and old voters in order to block the other group from coming into power. As a consequence, the ideal policies of the unskilled voters are featured more often in the political economy equilibria than any other groups regardless of the size of unskilled voters.

Notes:

Print version record

December 2009.