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Migration and Redistribution: Federal Governance of an Economic Union Matters

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  • Assaf Razin
  • Efraim Sadka

Abstract

Both the U.S. and the EU are an economic union: There is a single market for goods, capital, finance, and labor. That is, there is free mobility of goods and services, physical and financial capital, and labor among the member countries of the union. Nevertheless, there is much higher degree of economic policy coordination among the member states of the U.S than of the EU. We argue, by using a model of a union exhibiting migration-based fiscal externality, that the degree of coordination among the member states potentially contribute a great deal to our understanding of observed policy differences between the EU and the US as economic unions: the generosity of the welfare state and the skill composition of migration.

Suggested Citation

  • Assaf Razin & Efraim Sadka, 2021. "Migration and Redistribution: Federal Governance of an Economic Union Matters," NBER Working Papers 28558, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28558
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    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • H0 - Public Economics - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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