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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/25786
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| Title: | | Subsidies for wages and infrastructure: how to restrain undesired immigration  |
| Authors: | | Fenge, Robert Meier, Volker |
| Issue Date: | | 2006 |
| Series/Report no.: | | CESifo working paper 1741 |
| Abstract: | | This paper investigates regional or international transfers as a means to prevent immigration into unemployment. We analyze a two-country model with free migration in which the rich country is characterized by minimum wage unemployment. Matching grants for investment in infrastructure are superior to wage subsidies because the former instrument leads to a stronger productivity growth in the poor country, reducing both migration flows and unemployment in the rich country. This result is shown to hold for a sufficiently low level of the regional policy budget. It explains the exclusive use of investment subsidies in the EU. |
| JEL: | | D62 H23 H54 H77 J61 R50 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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