Migration and Social Replacement Incomes: How to Protect Low-Income Workers in the Industrialized Countries Against the Forces of Globalization and Market Integration

Hans-Werner Sinn

International Tax and Public Finance, 2005, vol. 12, issue 4, 375-393

Abstract: This paper discusses how an industrialized country could defend the living standard of its unskilled workers against the wage competition from immigrants. It shows that fixing social replacement incomes implies migration into unemployment. Defending wages with replacement incomes brings about first order efficiency losses that approximate the budget cost of the government. By contrast, wage subsidies involve much smaller welfare losses. While the exclusion of migrants from a national wage replacement program does not avoid the distortions in labor migration, the (temporary) exclusion of migrants from a national wage subsidy program makes it possible to reach the first best migration pattern despite the preservation of the welfare state. Copyright Springer Science + Business Media, Inc. 2005

Keywords: migration; unemployment; welfare (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (14)

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Working Paper: Migration and Social Replacement Incomes: How to Protect Low-IncomeWorkers in the Industrialized Countries against the Forces of Globalizationand Market Integration (2005)
Working Paper: Migration and Social Replacement Incomes: How to Protect Low-Income Workers in the Industrialized Countries Against the Forces of Globalization and Market Integration (2004)
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DOI: 10.1007/s10797-005-1618-x

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