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Unskilled Migration: a Burden or a Boon for the Welfare State?

Author

Listed:
  • Razin, A.
  • Sadka, E.
Abstract
Being relatively low earners, migrants are net beneficiaries of the welfare state. Therefore, in a static setup migration may be resisted by the entire native-born population. However, it is shown that in a dynamic setup with a pension system which is an important pillar of any welfare state, migration is beneficial to all income (high and low) and age (old and young) groups when the economy has a good access to international capital markets. The pro-migration feature of the dynamic model is weakened and possibly overturned when the economy does not have good access to the world capital markets. In this case, to the extent that factor prices are significantly affected by migration because of low substitution between labor and capital, low-skill native born and possibly also high-skill native born may lose.

Suggested Citation

  • Razin, A. & Sadka, E., 1999. "Unskilled Migration: a Burden or a Boon for the Welfare State?," Papers 8-99, Tel Aviv.
    • Handle: RePEc:fth:teavfo:8-99
    as

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    References listed on IDEAS

    as
    1. Mr. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 1998/061, International Monetary Fund.
    2. Mr. Richard Hemming, 1998. "Should Public Pensions be Funded?," IMF Working Papers 1998/035, International Monetary Fund.
    3. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-656, August.
    4. 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.
    5. 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.
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    More about this item

    Keywords

    MIGRATION ; PENSION FUNDS ; LABOUR MARKET;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J1 - Labor and Demographic Economics - - Demographic Economics

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