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How Migration Can Change Income Inequality?

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  • Assaf Razin
  • Efraim Sadka

Abstract

Motivated by the unique experience of Israel of a supply-side shock of skilled migration, and the concurrent rise in disposable income inequality, this paper develops a model which can explain the mechanism through which a supply-side shock of skilled migration can reshape the political-economy balance and the redistributive policies. First, it depresses the incentives for unskilled migrants to flow in, though they are still free to do so. Second, tax-transfer system becomes less progressive. Nonetheless, the unskilled native-born may well become better-off, even though they lose their political clout.

Suggested Citation

  • Assaf Razin & Efraim Sadka, 2016. "How Migration Can Change Income Inequality?," NBER Working Papers 22191, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22191
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    References listed on IDEAS

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    1. Jess Benhabib & Boyan Jovanovic, 2012. "Optimal Migration: A World Perspective," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 321-348, May.
    2. Razin, Assaf & Sadka, Efraim, 1993. "The Economy of Modern Israel," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226705897, December.
    3. Assaf Razin & Efraim Sadka & Phillip Swagel, 2002. "The Aging Population and the Size of the Welfare State," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 900-918, August.
    4. Robert E.B. Lucas (ed.), 2014. "International Handbook on Migration and Economic Development," Books, Edward Elgar Publishing, number 15465.
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    Cited by:

    1. Razin, Assaf & Rosefielde, Steven, 2016. "Israel and the 1990-2015 Global Developments: Riding with the Global Flows and Weathering the Storms," CEPR Discussion Papers 11445, C.E.P.R. Discussion Papers.
    2. Razin, Assaf, 2017. "Global Skill-Based Immigration Policies and Israel's Brain Drain," CEPR Discussion Papers 11903, C.E.P.R. Discussion Papers.
    3. Ding, Xiaozhou, 2021. "College education and internal migration in China," China Economic Review, Elsevier, vol. 69(C).
    4. Assaf Razin, 2017. "Israel's Immigration Story: Globalization Lessons," NBER Working Papers 23210, National Bureau of Economic Research, Inc.
    5. Razin, Assaf, 2017. "Israel’s Immigration Story: Globalization lessons," CEPR Discussion Papers 11877, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H0 - Public Economics - - General
    • J0 - Labor and Demographic Economics - - General

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