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Migration, Foreign Aid and the Welfare State
Author(s) -
Hatzipanayotou Panos,
Michael Michael S.
Publication year - 2012
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2012.00656.x
Subject(s) - welfare , economics , immigration , developing country , state (computer science) , welfare state , international economics , developed country , labour economics , development economics , economic growth , market economy , political science , population , law , demography , sociology , algorithm , politics , computer science
Aspects related to the links between international migration, foreign aid and the welfare state are highlighted in this paper. Migration is modeled as a costly movement from an aid‐recipient developing country with low income and no welfare state, towards a rich donor, developed country with a well‐developed welfare state. Within this model, it is found, 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. as a result of greater economic integration between the two countries, it is beneficial for the donor country to increase aid and the recipient country to increase the co‐financing rate.