Premium
Unskilled Migration: A Burden or a Boon for the Welfare State?
Author(s) -
Razin Assaf,
Sadka Efraim
Publication year - 2000
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00210
Subject(s) - economics , welfare , population , native born , capital (architecture) , pension , labour economics , human capital , welfare state , overlapping generations model , state (computer science) , market economy , geography , political science , demography , archaeology , finance , algorithm , sociology , politics , computer science , law
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.