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We model an overlapping-generations economy with two skill levels: skilled and unskilled. The welfare-state is modeled simply by a proportional tax on labor income to finance a demogrant in a balanced-budget manner. Therefore, some (the unskilled workers and old retirees) are net beneficiaries...
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and preferences) and thus be significantly affected by immigration affecting the distribution of characteristics … immigration, which may change the composition of the population in the ability and/or preference dimension. -- work incentives …
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.e. whether immigrants are more likely to move to countries with generous welfare systems. Although economic theory predicts that … immigration. -- immigration ; welfare spending …
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The social contract of the welfare state can be strained by the arrival of immigrants who receive welfare payments financed by citizens' taxes. We show, however, that the presence of unemployed immigrants receiving welfare payments is consistent with social harmony. The social harmony, which is...
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