Working Paper: NBER ID: w23713
Authors: Assaf Razin; Efraim Sadka
Abstract: We are motivated by the unique migration experience of Israel of a supply-side shock triggering skilled immigration and the concurrent decline in welfare-state redistribution. This paper develops a model, which can provide an explanation for the mechanism through which a supply-side shock triggering high-skill migration can also reshape the political-economy balance and the redistributive policies. The paper highlights the differences in the political-economy induced redistribution policies between the cases in which migrants participate in the electoral system and the case where they do not. When migrants are allowed to vote, and they take advantage of this right, then, following the shock, all income groups gain, except low skilled immigrants who lose. When migrants are not allowed to vote, or choose not to participate in elections, all income groups gain, except the skilled migrants who lose.
Keywords: migration; redistribution; political economy; voting rights
JEL Codes: F22; H0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Migrant voting (F22) | Income distribution (gains for all except low-skilled immigrants) (D31) |
| Migrant not voting (F22) | Income distribution (gains for all except skilled migrants) (D31) |
| Migrant voting (F22) | Regressive fiscal system (H29) |
| Migrant not voting (F22) | Progressive fiscal system (H29) |
| Changes in median voter's identity (D79) | Tax-transfer policies (H23) |