Nottingham Centre for Research on
Globalisation and Economic Policy (GEP)

GEP Research Paper 09/01

Can International Migration Ever Be Made a Pareto Improvement?

Wilhelm Kohler and Gabriel Felbermayr

Summary

The paper shows that efficiency gains (surplus) from immigration cannot be turned into a Pareto improvement for receiving-country-natives, unless the tax-cum-subsidy mechanism of compensation is allowed to discriminate against immigrants.

Abstract

We argue that compensating losers is more difficult for immigration than for trade and capital movements. While a tax-cum-subsidy mechanism allows the government to turn the gains from trade into a Pareto improvement, the same is not true for the so-called immigration surplus, if the redistributive mechanism is not allowed to discriminate against migrants. We discuss policy conclusions to be drawn from this fundamental asymmetry between migration and other forms of globalization.

JEL classification: F22, H21

Keywords: Migration Surplus, Redistribution, Pareto Improvement

Issued in January 2009

The paper is available in PDF format

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