Migration and Social Replacement Incomes: How to Protect Low-IncomeWorkers in the Industrialized Countries against the Forces of Globalizationand Market Integration

This paper discusses how an industrialized country could defend the
wages and social benefits of its unskilled workers against wage
competition from immigrants. It shows that fixing social standards
harms the workers and that fixing social replacement incomes
implies migration into unemployment. Defending wages with
replacement incomes brings about first-order efficiency losses that
outweigh the budget cost to the government. By contrast, wage
subsidies involve much smaller welfare losses. While the exclusion
of migrants from a national replacement program does not improve
the situation, the (temporary) exclusion of migrants from a
national subsidy program makes it possible to avoid a distortion of
the migration pattern.