Tax Burden and Migration: A Political Economy Perspective
IMF Working Papers, June 1, 1997
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- Tax Burden and Migration: A Political Economy Perspective
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Bibliographic details
- Authors: Efraim Sadka, Assaf Razin
- Published: June 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451956283.001
Summary
- The extent of taxation and redistribution policy is determined at a political-economy equilibrium by a balance between those who gain and those who lose from a more extensive tax-transfer policy.
- In a stylized model of migration and human capital formation, the authors find that low-skill migration may lead to a lower tax burden and less redistribution than no migration, even though the migrants join the pro-tax coalition.
Key findings and conclusions
- Low-skill migration can paradoxically reduce the equilibrium tax burden and redistribution.
- Migrants may join the pro-tax coalition but the overall political-economy equilibrium can shift toward less redistribution.
- The result runs somewhat against conventional wisdom about the fiscal impacts of low-skill migration.
Model and mechanisms (as described)
- Analysis is based on a stylized model that integrates migration and human capital formation.
- The political-economy equilibrium is determined by the balance of gains and losses from a more extensive tax-transfer policy.
- Keywords and technical terms used: equilibrium migration condition, equilibrium tax rate, income gap, low-skill migrant, migration quota, mover accent, tax-transfer policy, tax incidence.
Subject coverage
- Consumption
- Education
- Migration
- National accounts
- Population and demographics
- Tax incidence
- Tax policy
Content in this bundle
- Tax Burden and Migration: A Political Economy Perspective -WP/97/78