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Migration, Tied Foreign Aid and the Welfare StatePanos HatzipanayotouAthens University of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Michael S. MichaelUniversity of Cyprus - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) July 2005 CESifo Working Paper Series No. 1497 Abstract: In this paper we highlight aspects related to the links between international migration, foreign tied aid and the welfare state. We model migration as a costly movement from an aid-recipient developing country with low income, poor infrastructure, and no welfare system, towards a rich donor, developed country with a well-developed welfare system. Within this model we find, among other things, that the best response of the developed donor country is to increase aid as the co-financing rate by the recipient country increases. When the immigration cost decreases, e.g. due to greater economic integration between the two countries, it is beneficial for the donor country to increase aid.
Number of Pages in PDF File: 25 Keywords: migration, tied foreign aid, welfare state JEL Classification: F22, F35, H23 working papers seriesDate posted: July 21, 2005Suggested CitationContact Information
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