Working Paper: CEPR ID: DP2414
Authors: Gil S. Epstein; Arye L. Hillman
Abstract: The social contract of the welfare state can be strained by the arrival of immigrants who receive welfare payments financed by citizens' taxes. We show, however, that the presence of unemployed immigrants receiving welfare payments is consistent with social harmony. The social harmony, which is a consequence of a view of unemployment as a labour-market discipline, contrasts with the social conflict predicted by Karl Marx when he proposed his earlier version of the same explanation for unemployment. We demonstrate that a socially harmonious policy is always feasible. Outcomes without social harmony can therefore always be suitably amended.
Keywords: welfare state; social harmony; immigrants
JEL Codes: F22; I38; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployed immigrants receiving welfare (J68) | social harmony (I31) |
| unemployment as a disciplinary mechanism (J65) | effort exerted by employed workers (J39) |
| number of immigrants increases (J11) | willingness of local workers to exert effort (J29) |
| welfare benefits set appropriately (I38) | discipline on employed workers (J53) |
| welfare policy design (I38) | social outcomes (I14) |