The authors thank the Editor, an anonymous referee of the journal, Mathias Wrede, Thomas Moutos and Apostolis Phillipopoulos for useful comments and suggestions. For any remaining shortcomings the authors are solely responsible.
Migration, Foreign Aid and the Welfare State
Version of Record online: 16 APR 2012
© 2012 Blackwell Publishing Ltd
Review of Development Economics
Volume 16, Issue 2, pages 199–215, May 2012
How to Cite
Hatzipanayotou, P. and Michael, M. S. (2012), Migration, Foreign Aid and the Welfare State. Review of Development Economics, 16: 199–215. doi: 10.1111/j.1467-9361.2012.00656.x
- Issue online: 16 APR 2012
- Version of Record online: 16 APR 2012
Aspects related to the links between international migration, foreign aid and the welfare state are highlighted in this paper. Migration is modeled as a costly movement from an aid-recipient developing country with low income and no welfare state, towards a rich donor, developed country with a well-developed welfare state. Within this model, it is found, among other things, that the best response of the developed donor country is to increase aid as the co-financing rate by the recipient country increases. When the immigration cost decreases, e.g. as a result of greater economic integration between the two countries, it is beneficial for the donor country to increase aid and the recipient country to increase the co-financing rate.