Hostname: page-component-77c89778f8-m8s7h Total loading time: 0 Render date: 2024-07-25T03:45:48.579Z Has data issue: false hasContentIssue false

Migration and Social Insurance1

Published online by Cambridge University Press:  17 August 2016

Helmuth Cremer
Affiliation:
Toulouse School of Economics(GREMAQ, IDEI and Institut universitaire de France)
Catarina Goulão
Affiliation:
Toulouse School of Economics(GREMAQ, INRA)
Get access

Summary

Mobility across countries is often suspected to affect the coexistence of different social insurance systems. A wide variety of social protection systems exist within the EU. Some are of Beveridgean inspiration (with universal and more or less flat benefits), while others are mainly Bismarckian (with benefits related to past contributions). Concerns about the sustainability of the most generous and redistributive (Beveridgean) insurance systems are often based on the assumption of (near) perfect and costless mobility. In reality, labor mobility remains limited. Such low levels of migration rates could, mistakenly, lead to the conclusion that migration would currently not be affecting the redistributive social insurance systems. We address this issue in a two-country setting, where mobility is costly and where individuals differ in mobility cost (attachment to their native country). A Bismarckian insurance system is not affected by migration while a Beveridgean one is. Our results suggest that the race-to-the-bottom affecting tax rates may be more important under Beveridge-Beveridge competition than under Beveridge-Bismarck competition. Finally, we study the strategic choice of the type of social protection. We show that Bismarckian governments may find it beneficial to adopt a Beveridgean insurance system.

Résumé

Résumé

Les pays de l’UE ont différents systèmes de protection sociale. Dans certains, ils sont « beveridgiens », ne dépendent pas des revenus antérieurs des bénéficiaires et les prestations sociales sont modestes. Dans d’autres, ils sont « bismarckiens » et les allocations sont globalement plus élevées, mais d’un montant inégal, en fonction des cotisations passées de chacun (à l’image d’un système assurantiel). La mobilité (internationale) est souvent perçue comme un obstacle à la coexistence de systèmes d’assurance sociale qui redistribuent à des degrés différents. Même si, en réalité, la mobilité de la main-d’œuvre reste limitée, cela ne signifie pas qu’elle ne constitue pas un danger pour la protection sociale. Nous étudions cette question dans un modèle à deux pays, où la mobilité est coûteuse et où les individus diffèrent dans leurs coûts de mobilité (liés à l’attachement à leur pays d’origine). Nous montrons que, contrairement à un système beveridgien, un système bismarckien n’est pas affecté par la migration. Nos résultats suggèrent aussi que la baisse du niveau de protection qu’entraîne la mobilité est plus forte dans un monde à deux pays beveridgiens que dans celui d’un pays beveridgien et d’un autre bismarckien. Enfin, nous étudions le choix stratégique du type de protection sociale et montrons que les gouvernements bismarckiens peuvent avoir un intérêt à adopter un système beveridgien.

Type
Research Article
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

1

We thank Michel Lebreton, Efraim Sadka, and the participants in the Public Economics and Political Economy Workshop (Toulouse School of Economics) for their helpful suggestions and comments. Financial support from the Chaire « Marché des risques et création de valeur » of the FdR/SCOR is gratefully acknowledged.

2

Toulouse School of Economics. 21, Allée de Brienne, 31015 Toulouse Cedex 6, FRANCE, tel: +33 (0)5 61 12 86 06. helmuth.cremer@tse-fr.eu

3

Corresponding author: Toulouse School of Economics. 21, Allée de Brienne. 31015 Toulouse Cedex 6, FRANCE, tel: +33 (0)5 61 12 86 82. Catarina.Goulao@tse-fr.eu

References

Breyer, F. and Kolmar, M. (2002). Are national pension systems efficient if labor is (im)perfectly mobile? Journal of Public Economics 83, 347374.Google Scholar
Bureau, D. and Richard, C. (1997). Public insurance and mobility: An exploratory analysis in the context of European economic unification. Annales d’Economie et de Statistique 45, 275290.Google Scholar
Casarico, A. and Devillanova, C. (2003). Social security and migration with endogenous skill upgrading. Journal of Public Economics, 87, 773797.Google Scholar
Cremer, H. and Pestieau, P. (2003). Social insurance competition between Bismark and Beveridge. Journal of Urban Economics, 54, 181196.Google Scholar
Cremer, H. and Pestieau, P. (1998). Social insurance, majority voting and labor mobility. Journal of Public Economics, 68, 1998, 397420.Google Scholar
Cremer, H. and Pestieau, P. (2004). Factor mobility and redistribution, Handbook of Regional and Urban Economics, V. Henderson and J.F. Thisse, éd., North-Holland, 25292560.Google Scholar
Glazer, A., Kanniainen, V. and Poutvaara, P. (2008). Income taxes, property values, and migration. Journal of Public Economics 92, 915923.Google Scholar
Grogger, , Jeffrey, and Gordon, H. Hanson (2011). Income maximization and the selection and sorting of international migrants. Journal of Development Economics, 95, 4257.Google Scholar
Homburg, S. and Richter, W. (1993). Harmonizing public debt and pension schemes in the European community. Journal of Economics, 7(1), 5163.Google Scholar
Hindriks, J. (1999). The consequences of labour mobility for redistribution: tax vs. transfer competition. Journal of Public Economics 74, 215234.Google Scholar
Kolmar, M. (2007). Beveridge versus Bismarck public-pension systems in integrated markets. Regional Science and Urban Economics 37, 649669.Google Scholar
Leite-Monteiro, M. (1997). Redistributive policy with labour mobility across countries. Journal of Public Economics 65, 229244.Google Scholar
Lejour, A. and Verbon, H. (1994). Labour mobility and decision making on social insurance in an integrated market. Public Choice 79, 161185.Google Scholar
Poutvaara, P. (2007). Social security incentives, human capital investment and mobility of labor. Journal of Public Economics 91 12991325.Google Scholar
Razin, A. and Sadka, E. (1999). Migration and pension with international capital mobility. Journal of Public Economics 74, 141150.Google Scholar
Rossignol, S. and Taugourdeau, E., (2006). Asymmetric social protection systems with migration. Journal of Population Economics 19, 481505.Google Scholar
Sinn, H-W., (1990). Tax harmonization and tax competition in Europe. European Economic Review, 34, 489504.Google Scholar
Špidla, V. (2006). For Europe to Succeed Europeans Need to Become More Mobile. European Commissioner for Employment, Social Affairs and Equal Opport unities. October 20, 2006.Google Scholar
Tom, Vandenbrande, Laura, Coppin, Peter, van der Hallen, Peter, Ester, Didier, Fourage, Anette, Fasang, Sara, Geerdes, Klaus, Schömann (2006). Mobility in Europe - Analysis of the 2005 Eurobarometer survey on geographical and labour market mobility, European Foundation for the Improvement of Living and Working Conditions.Google Scholar
Wildasin, , David, E. (2003). Fiscal competition in space and time. Journal of Public Economics, 87, 25712588.Google Scholar