International migration, the provision of public goods, and welfare

This paper highlights the importance of the "public finance" aspects of int ernational migration on wages and welfare. We construct a general equilibri um model of a labor-exporting (i.e., source) or of a labor-importing (i.e., host) country with identical consumers, producing many private traded good s and one public consumption good. Within this framework, it is shown that contrary to the existing literature, international migration may have adver se effects on wages and welfare in both countries, even if commodity prices are constant. The analysis describes and explains the conditions under whi ch these adverse effects may occur. (C) 1999 Elsevier Science B.V. All righ ts reserved.