Working Paper: NBER ID: w19346
Authors: Assaf Razin
Abstract: This paper provides overview of recent work on migration and welfare state tax policies: 1. I survey the literature on the tax burden of migration. 2. I empirically identify the differential effect of the generosity of the welfare state on the skill composition of immigrants across the two groups (the "free-migration" group and the "policy-restricted migration" group) in an unbiased way. 3. I outline the implications of the tax burden of migration to tax competition within a union, facing migration from the rest of the world.Each host country in a competitive regime balances on the margin these gains and losses from migration. In doing so, each country takes the well-being of the migrants as given. Therefore, It ignores the fact that a tax-migration policy that admits an extra migrant raises the well-being that must be accorded to migrants by all the other host countries, in order to elicit the migrant to come in; and more capital income leaks, through capital taxation, to immigrants.
Keywords: migration; welfare state; tax competition
JEL Codes: F2; F22; H2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Skill composition of migrants in free-migration regime (J61) | Overall skill level of incoming migrants (J61) |
| Skill composition of migrants in policy-controlled migration regime (J68) | Overall skill level of incoming migrants (J61) |
| Welfare state generosity (I38) | Skill composition of migrants in free-migration regime (J61) |
| Welfare state generosity (I38) | Skill composition of migrants in policy-controlled migration regime (J68) |
| Welfare state generosity (I38) | Skill composition of migrants (J61) |