The Welfare State and Migration: A Dynamic Analysis of Political Coalitions

Assaf Razin, Efraim Sadka and Benjarong Suwankiri

No 20806, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a dynamic political-economic theory of welfare state and immigration policies, featuring three distinct voting groups: skilled workers, unskilled workers, and old retirees. The essence of inter- and intra-generational redistribution of a typical welfare system is captured with a proportional tax on labor income to finance a transfer in a balanced-budget manner. We characterize political-economic equilibrium policy rules consisting of the tax rate, the skill composition of migrants, and the total number of migrants. When none of these groups enjoy a majority (50 percent of the voters or more), political coalitions will form. With overlapping generations and policy-determined influx of immigrants, the formation of the political coalitions changes over time. These future changes are taken into account when policies are shaped. The paper characterizes the evolution of the political coalitions that implement welfare state and migration policies.

JEL-codes: F22 H0 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-cdm, nep-mig, nep-pbe and nep-pol
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Suwankiri, Benjarong & Razin, Assaf & Sadka, Efraim, 2016. "The welfare state and migration: A dynamic analysis of political coalitions," Research in Economics, Elsevier, vol. 70(1), pages 122-142.

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Journal Article: The welfare state and migration: A dynamic analysis of political coalitions (2016)
Working Paper: The Welfare State and Migration: A Dynamic Analysis of Political Coalitions (2015)
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