We argue that the degree of coordination among the member states potentially contribute a great deal to our understanding of observed policy differences between the EU and the US as economic unions: the generosity of the welfare state and the skill composition of migration.

The intratemporal redistribution feature of the welfare state makes it an attractive destination for immigrants, particularly for low-skill immigrants. George Borjas (1994) reports that foreign-born households in the United States accounted for 10 percent of households receiving public...