Assaf Razin, Efraim Sadka
Migration-Induced Redistribution with and without Migrants' Voting
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We are motivated by the unique migration experience of Israel, of a supply-side shock triggering skilled immigration and the concurrent decline in welfare-state redistribution. This paper develops a model that can provide an explanation for the mechanism through which a supply-side shock, triggering high-skill migration, can also reshape the political-economy balance and the redistributive policies. The paper highlights the differences in the political-economy-based redistribution policies between the cases in which migrants participate in the electoral system and the case in which they do not. When migrants are allowed to vote, and take advantage of this right, then, all income groups gain (in their net income), except the low-skilled immigrants, who lose. However, when migrants are not allowed to vote, or choose not to participate in elections, all income groups gain, except the skilled migrants who lose.