Review of 'Migration and the Welfare State' - Authors : Assaf Razin, Efraim Sadka and Benjarong Suwankiri

This book deals with a very important question from an economic and political perspective: immigration and the future of the Welfare State. While its focus is mostly theoretical, the theory is flexible enough to accommodate variants and extensions of a benchmark model that allow for dealing with specific contexts and increasingly complex issues. The book is very well structured — each chapter clearly builds on the previous ones (which themselves build on previous work by the authors) and proceeds gradually. It starts with a basic set-up which is enriched sequentially with new ingredients (e.g., allowing for more heterogeneity in migrants' skills, in the type of welfare state considered — Europe v. the United States, moving from a static to a dynamic framework).The book has three main parts. Part 1 develops a series of static models of immigration and the welfare state, starting with immigration as a determinant of the welfare state, following with reverse effects (the “welfare magnet” hypothesis) and, finally, ending with joint determination. Part 2 extends these models along the time dimension using overlapping-generations models. This is particularly welcome as this allows for an analysis of intergenerational effect, which nicely complements the intragenerational effects emphasized in the static analysis. These models also allow for introducing political economy considerations such as strategic voting, which is dealt with in a separate chapter. Lastly, Part 3 deals with the specific measurement of fiscal benefits and costs of (unskilled) immigration and considers how host countries (and later also source countries such as EU accession countries) can change their fiscal and migration policies when they compete to attract a larger pool of potential migrants