The Openness-Equality Trade-Off in Global Redistribution

Abstract:     

Because most inequality is across rather than within states, migration has greater potential to reduce global inequality than within-state tax-and-transfer programs. Although at present migration only reduces global inequality by roughly one fifth as much as tax-and-transfer programs within the Organization for Economic Cooperation and Development (OECD), migration to some countries has a far greater impact per person. These countries, primarily in the Gulf Cooperation Council (GCC) monarchies, accept massive numbers of migrants. Yet doing so makes these countries stunningly unequal internally and they are famous for their abuse of the human rights of these migrants. If OECD countries were to imitate the GCC it would reduce global inequality by more than full equalization within the OECD would. Furthermore, such a policy could reduce inequality among current OECD citizens and win political support from those within OECD countries who most oppose immigration if OECD workers displaced by technology and globalization were given the exclusive right to employ workers from poor countries. Such examples suggest a philosophically disturbing trade-off between openness to global inequality-reducing migration and internal equality. For example, social prejudices based on national origin or authoritarian regimes might be necessary to sustain a massive immigration to the OECD and thus could be Pareto-improving.

The online appendix may be found at http://ssrn.com/abstract=2755304.

Number of Pages in PDF File: 45

Keywords: global redistribution, migration, global inequality, Gulf Cooperation Council, prejudice

JEL Classification: D63, F22, H21, J61, O19