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The (Non-Parochial) Welfare Economics of Immigration

Author

Listed:
  • John E. Roemer

    (University of California)

Abstract

The author studies the effect of immigration on world welfare. The world consists of two areas, South and North, the former populated by low-skill workers, and the latter by low- and high-skill workers. Immigrants from the South to the North have two effects in the North: a mixed native-foreign working-class lowers union power, and immigrants also lower the solidarity of the employed citizens with the unemployed. Thus, the replacement ratio falls with the frequency of immigrants in the low-skill pool. The author calculates the optimal level of immigration, from an observer's point of view who maximizes world welfare, with a variety of social welfare functions. The interesting result is that the optimal level of immigration for an egalitarian observer is significantly less than the open-borders equilibrium level. This result is due to the model's two non-Walrasian features: the union bargaining problem and the political economy of the welfare state.

Suggested Citation

  • John E. Roemer, 1997. "The (Non-Parochial) Welfare Economics of Immigration," Discussion Papers 97-02, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:9702
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    More about this item

    Keywords

    immigration; political economy; welfare;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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