TY - JOUR
T1 - Migration and redistribution
T2 - Why the federal governance of an economic union does matter
AU - Razin, Assaf
AU - Sadka, Efraim
N1 - Publisher Copyright:
© 2021
PY - 2021/3/1
Y1 - 2021/3/1
N2 - Federal governance matters. Policy coordination allows the economic union to exercise monopsony power over migrants. Therefore the migration volumes under the policycompetition regime exceed those under the policy-coordination regime. With loose federal governance, competition over low-skilled migrants, who come with no capital, induces the individual member state to raise the provision of social benefit, so as to attract more migrants when starting from the coordination equilibrium. As a result, the social benefits in all other member States must also be raised to keep these migrants at their own economy. This amounts to excessively high income redistribution – a negative fiscal externality.
AB - Federal governance matters. Policy coordination allows the economic union to exercise monopsony power over migrants. Therefore the migration volumes under the policycompetition regime exceed those under the policy-coordination regime. With loose federal governance, competition over low-skilled migrants, who come with no capital, induces the individual member state to raise the provision of social benefit, so as to attract more migrants when starting from the coordination equilibrium. As a result, the social benefits in all other member States must also be raised to keep these migrants at their own economy. This amounts to excessively high income redistribution – a negative fiscal externality.
KW - Economic union
KW - Efficiency
KW - Federal government
KW - Migration
KW - Skill mix
UR - http://www.scopus.com/inward/record.url?scp=85114103236&partnerID=8YFLogxK
U2 - 10.1016/j.jge.2021.100001
DO - 10.1016/j.jge.2021.100001
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AN - SCOPUS:85114103236
SN - 2667-3193
VL - 1
JO - Journal of Government and Economics
JF - Journal of Government and Economics
M1 - 100001
ER -