This paper analyses redistribution policies that transfer income between owners of immobile factors of production and workers in a given region. The menu of income distribution possibilities attainable through tax/transfer policy in the presence of labour mobility is characterized. Simple general equilibrium analysis shows that migration can lead to Pareto-inferior outcomes in the destination region if immigrants are the beneficiaries of redistributive transfers. All residents of the destination region may gain, however, if transfer payments are also paid to workers in the source region so as to reduce the level of immigration.

David E. Wildasin / dew@davidwildasin.us