A POLITICAL ECONOMIC-ANALYSIS OF LABOR MIGRATION AND INCOME-REDISTRIBUTION

We present a two-country political economic model of income redistribu tion with internationally mobile labor. Migration can be exogenous and /or endogenous (i.e., determined by labor income differentials). Polit ical influence is determined by the size and homogeneity of the groups , where the latter can be affected by immigration. We show that immigr ation can increase the transfers to, and the income of, the mobile gro up. We also investigate the possibility of migration regulation, tax-t ransfer policy competition and coordination and, finally, coordination of regulation policies. it is shown that the selection of any of thos e regimes will depend on the particular distribution of political infl uence among the relevant social groups in the two countries.