LABOR MIGRATION AND REDISTRIBUTION WITH ALTERNATIVE ASSIMILATION POLICIES - THE SMALL ECONOMY CASE

This paper shows that the dynamics and the steady-stare equilibrium of redistribution in a small economy opening itself to labor migration d epends very much on the way immigrants are assimilated both socially a nd politically. It contrasts two types of assimilation policy. In the first one, only full-fledged citizens benefit from redistribution and can participate into the political process, and it takes one period fo r a migrant to become a citizen. In the second one, migrants are right away granted citizenship. The paper also shows that redistribution de pends on whether or not it is designed myopically. (C) 1998 Elsevier S cience B.V.