Unskilled migration: A burden or a boon for the welfare state?

Assaf Razin*, Efraim Sadka

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

52 Scopus citations

Abstract

As 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 all age (old and young) groups, when the economy has 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 such markets. In this case, to the extent that factor prices are significantly affected by migration because of low substitution between labour and capital, low-skill native born and possibly also high-skill native born may lose.

Original languageEnglish
Pages (from-to)463-479
Number of pages17
JournalScandinavian Journal of Economics
Volume102
Issue number3
DOIs
StatePublished - 2000

Keywords

  • Heterogeneous population
  • Low-skilled migrants
  • Migration quotas
  • Overlapping generations
  • Pay-as-you-go pension

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