Immigration as a Commitment Device


Kemnitz, Alexander


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URL: https://ub-madoc.bib.uni-mannheim.de/997
URN: urn:nbn:de:bsz:180-madoc-9977
Document Type: Working paper
Year of publication: 2004
The title of a journal, publication series: Discussion Papers / Institut für Volkswirtschaftslehre und Statistik
Volume: 614
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Institut für Volkswirtschaftslehre und Statistik > Discussion Papers
Subject: 330 Economics
Classification: JEL: D72 J68 F22 ,
Subject headings (SWD): Einwanderung , Arbeitslosigkeit , Demokratie , Wohlfahrtsstaat
Abstract: This paper shows that the toleration of immigrants who are on average less skilled than natives can be part of a support-maximizing government policy, despite a general political bias in favor of the poor. We make this point in a simple model with redistributive unemployment insurance. Once wage contracts are binding, the government has an incentive to increase the unemployment benefit, leading to excessive unemployment. Affecting the political balance within the constituency, immigrants can serve as a commitment device against this time-inconsistency. We show that this possibility can be greatly promoted by restrictions on political naturalization.
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