Working Paper: NBER ID: w21606
Authors: Assaf Razin; Efraim Sadka
Abstract: We develop a political-economy model of economic union and compare the competion regime to the coordination regime. Key policy differences emerge between the two regimes: concerning the generosity of the welfare state and the skill composition of migration. We argue that the differences between the U.S. and the EU - the degree of coordination among the member states - contribute to the observed policy differences, as the model predicts.
Keywords: migration; welfare state; economic union; policy competition; policy coordination
JEL Codes: F22; F42; H1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Competition among EU member states (F55) | Higher share of low-skill migrants (J69) |
| Welfare state structure (I38) | Migration patterns (F22) |
| US's less generous welfare system (I38) | Higher proportion of high-skill migrants (F22) |
| Aging population in the US (J11) | Favor high-skill migrants (F22) |
| Structure of the economic union (F36) | Welfare state outcomes (I38) |