The Economics of Immigration into a Nordic Welfare State - And a Comparison to an Immigration State and a Guest Worker State

Abstract

This paper examines the economic and related consequences of immigration from a less developed country (LDC) to a developed country (DC) in three different stylized cases: A guest worker society of the Dubai type, an immigrant society of the US type, and a tax-based welfare state with institutions of the Nordic type. In the Dubai type case it appears that mutually beneficial decisions can be made, and the same applies to a degree in the US type case. However, in the Nordic type evolved welfare case, immigration is only an advantage for the immigrant, especially one with less marketable skills, while it is a disadvantage for the natives. This poses an additional threat to the continuation of this type of welfare state.

Keywords: Immigration, welfare state

JEL Classification: F22, J41, J70, O15