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