 The welfare state and migration: A dynamic analysis of political coalitionsBenjarong Suwankiri, Assaf Razin and Efraim Sadka Research in Economics, 2016, vol. 70, issue 1, 122-142 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 provide an analytical characterization of 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. Keywords: Generosity of welfare state; Pay as you go; Political coalitions; Strategic voting; Skill composition of migration; Markov-perfect political equilibrium (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:70:y:2016:i:1:p:122-142 DOI: 10.1016/j.rie.2015.07.001 Access Statistics for this article Research in Economics is currently edited by Federico Etro More articles in Research in Economics from Elsevier |
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