Resisting Migration: The Problems of Wage Rigidity and the Burden on the Welfare State

Just like any trade activity in well—functioning markets, migration tends to generate gains to all parties involved: the migrants as well as the native population. But these gains tend to be typically rather low. However, when the labor market is mal—functioning, migration exacerbates imperfections in the market. Consequently, it may lead to losses to the veteran population which can be quite sizable. Another problem raised by migration is the toll it imposes on the welfare state. Being unable to perfectly exclude migrants from various entitlement programs and public services, the modern welfare state finds it more and more costly to run its various programs. These two economic considerations may help explain why there is strong resistance to migration. Consequently, to be able to benefit more from migration, one may want to improve the functioning of the markets (with a possible compensation to wage earners that compete with unskilled migrants) and to be more selective in the scope of and the eligibility for the state entitlement programs.

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Working or Discussion Paper
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Working Paper No. 20-94

 Record created 2018-08-01, last modified 2020-10-28

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