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Immigration and the survival of the welfare state

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  • Francesc Ortega
Abstract
This paper analyzes the political sustainability of the welfare state in a model where immigration policy is also endogenous. In the model, the skills of the native population are affected by immigration and skill accumulation. Moreover, immigrants affect future policies, once they gain the right to vote. The main finding is that the long-run survival of redistributive policies is linked to an immigration policy specifying both skill and quantity restrictions. In particular, in steady state the unskilled majority admits a limited inflow of unskilled immigrants in order to offset growth in the fraction of skilled voters and maintain a high degree of income redistribution. Interestingly, equilibrium immigration policy shifts from unrestricted skilled immigration, when the country is skill-scarce, to restricted unskilled immigration, as the fraction of native skilled workers increases. The analysis also suggests a new set of variables that may help explain international differences in immigration restrictions.

Suggested Citation

  • Francesc Ortega, 2004. "Immigration and the survival of the welfare state," Economics Working Papers 815, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:815
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    Cited by:

    1. John E. Roemer & Karine Van der Straeten, 2006. "The Political Economy of Xenophobia and Distribution: The Case of Denmark," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 251-277, July.
    2. Michael Ben-Gad, 2008. "Capital-Skill Complementarity and the Immigration Surplus," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 335-365, April.
    3. Arye L. Hillman & Ngo Long, 2022. "Immigrants as future voters," Public Choice, Springer, vol. 190(1), pages 149-174, January.
    4. Paweł Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," RSCAS Working Papers 2013/79, European University Institute.
    5. Emily Blanchard & Gerald Willmann, 2007. "Political Stasis or Protectionist Rut? Policy Mechanisms for Trade Reform in a Democracy," CESifo Working Paper Series 2070, CESifo.
    6. Blanchard, Emily & Willmann, Gerald, 2011. "Escaping a protectionist rut: Policy mechanisms for trade reform in a democracy," Journal of International Economics, Elsevier, vol. 85(1), pages 72-85, September.

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    More about this item

    Keywords

    Repeated voting; Markov equilibrium; political economy; immigration policy; welfare state; redistribution; skill premium; education;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I2 - Health, Education, and Welfare - - Education
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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