Suppressing Resistance to Low-Skill Migration
Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)
Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)
INTERNATIONAL TAX AND PUBLIC FINANCE, Vol. 3, No. 3, Special Issue
Just like any other trade activity, migration tends to generate gains to all parties involved, the migrants as well as the native population, if markets are well-functioning. But typically these gains tend to be rather low. However, when the labor market is malfunctioning, migration may exacerbate the imperfections in the market. Consequently, it could lead to losses to the host-country population, which can be quite sizable. An additional problem raised by migration is the toll it imposes on the welfare state. As a democracy, the host-country cannot exclude migrants from various entitlement programs and public services. As a consequence, the modern welfare state could find it more and more costly to run its various programs when they attract low-income migrants. These considerations may help explain why there is strong resistance to migration. Consequently, to be able to benefit from migration, one may want to improve the functioning of the markets (with a compensation to wage earners that compete with unskilled migrants) and to downsize the scope of the state entitlement programs.
JEL Classification: O15, H53, J31, J61Accepted Paper Series
Date posted: January 21, 1997
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