Resisting Migration: Wage Rigidity and Income Distribution

Summary

Like any trade activity, migration tends to generate gains to all parties involved, (the migrants as well as the native-born population. However, with a mal-functioning labor market, migration will exacerbate the imperfections in the market. Consequently, it may lead to losses to the native-born population which typically are quite sizable. Another economic problem raised by migration is the additional toll imposed on the welfare-state income-distribution institutions. Being unable to exclude migrants from the various entitlement programs and public services, the modern welfare state can find migration rather costly. These two economic considerations may help explain the resistance to migration despite the pure gains-from-trade benefits created by it.. Immigration could be more beneficial to the native-born population when the labor markets are better-functioning and the welfare programs are less comprehensive.