Migration and the welfare state: The economic power of the non-voter?

This paper investigates the impact of emigration on the political choice of the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the political influence of the less mobile part of the population. But the new political majority then also has to take into account that emigration reduces tax revenues and thereby affects the feasible set of redistribution policies. We find that the direction of the total effect of migration depends on the initial income distribution in the economy. Our results also contribute to the empirical debate on the validity of the median-voter approach in cross-country studies for explaining the relation between income inequality and redistribution levels. JEL Classification F22 · H50 · D31 · D72     

Mobility and the Role of Education as a Commitment Device

In closed economies, human capital investment faces a hold-up problem of excessive redistributive taxation. Increased international labor mobility, however, changes the constraints which affect optimal education and tax policy. We show that in a non-altruistic, gerontocratic world, investments in human capital which increase the mobility of the young generation can be interpreted as a commitment device overcoming the hold-up problem. This is in line with Kehoe (1989) who derives a similar result with respect to capital mobility.     

To Go or Not to Go: Emigration from Germany

Abstract. This study analyses the qualitative aspects of emigration from Germany, taking account of economic and non-economic reasons. The reported willingness to emigrate from Germany in the German Socio-Economic Panel (GSOEP) is explained for men and women by three groups of variables: individual characteristics, household characteristics and regional characteristics. It transpires that the educational background and West German residency positively affect the willingness to emigrate, whereas German nationality, age and the family situation are mostly negatively correlated with it.     

Harmonisation of Old-age Security Within the European Union

Not sufficiently harmonised national pension systems withinthe European Union distort the allocation of labour and endangerredistributive activities. This paper identifies the most decentralisedlevel of harmonisation which guarantees efficient allocationand enables redistribution. For this, we build on theoreticalresults from the literature to evaluate the realised distributionof the legal power between the European Union and the MemberStates and the resulting level of harmonisation. We find thatharmonisation is sub-optimally low. Binding rules guaranteedby the European Union are needed implying that the Member Stateshave to concede more fundamental responsibilities to the EuropeanUnion. (JEL F22, H55, K33, N34)     

A political-economy perspective on social expenditures: corruption and in-kind versus cash transfers

This paper presents a novel political-economy perspective on the composition of social expenditures. We take into account the possibility that institutions are weak, i.e. there is corruption, and analyze how this affects the government’s choice between cash and in-kind transfers. Our results show that the share of in-kind transfers (e.g. basic health care, public housing or food stamps), whose appropriation by corrupt politicians is more easily observed than in the case of cash transfers, increases with corruption. This positive relationship exists, however, only in highly democratic countries. We argue that voters use their political influence in democratic countries to ensure that a higher share of transfers is provided in kind thereby shielding transfers from appropriation by corrupt politicians.     

How do Migrants Choose Their Destination Country? An Analysis of Institutional Determinants

We analyze the effects of socio‐economic and institutional determinants, especially labor‐market institutions and features of social protection systems, on migrants’ location choices. Based on micro‐data for France, Germany, the UK, and the USA, we study migration to one of these four countries using a multinomial choice framework. Our estimates confirm conventional results regarding wages, networks, and unemployment rates. In addition, we find that there are indications of “insider–outsider effects” for union coverage and unemployment benefits, while employment protection does not have a clear‐cut impact on migration. Good education and health systems tend to attract migrants, while generous pension systems deter them.