How Migration Can Change Income Inequality?

Assaf Razin and Efraim Sadka

No 11244, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Motivated by the unique experience of Israel of a supply-side shock of skilled migration, and the concurrent rise in disposable income inequality, this paper develops a model which can explain the mechanism through which a supply-side shock of skilled migration can reshape the political-economy balance and the redistributive policies. First, it depresses the incentives for unskilled migrants to flow in, though they are still free to do so. Second, tax-transfer system becomes less progressive. Nonetheless, the unskilled native-born may well become better-off, even though they lose their political clout. 

Date: 2016-04
New Economics Papers: this item is included in nep-mig
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Working Paper: How Migration Can Change Income Inequality? (2016)
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