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2. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 2 AIMS OF THE PAPER This paper aims: 1)to address the issues of migration management and its socio-economic impact, attempting to demonstrate how A WISE GOVERNANCE OF INTERNATIONAL AND INTERNAL MIGRATION, combined with A RISK- MANAGEMENT CULTURE, could represent a valid response to the EU’s organizational myopia; 2)to clarify the reasons why IMMIGRATION, if properly managed, COULD BE VIEWED AS A RESOURCE RATHER THAN A PROBLEM, and used as AN EFFICIENT TOOL OF INCOME REDISTRIBUTION to eradicate income inequality and new forms of poverty which threaten the reliability and the safety of the European socio-economic system;

3. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 3 AIMS OF THE PAPER This paper aims: 3)to show that IMPROVEMENTS OF THE REDISTRIBUTIVE FUNCTION OF TAX AND WELFARE NATIONAL SYSTEMS and AN INCREASE OF THEIR RESILIENCE represents an essential precondition to eliminate vulnerabilities of the individual European states’ socio- economic systems which threatens the realization of all human rights; 4) to discuss whether and to what extent STRENGTHENING THE RESILIENCE OF NATIONAL TAX AND WELFARE SYSTEMS can help build RESILIENCE IN HUMAN RIGHTS.

4. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 4 TOPICS 1.The effects of migration on inequality: a brief review of the literature 2.Can immigration work as an effective tool of redistribution? 3.The international debate on the fiscal impact of immigration 4.The hypothesis on the equalising power of skilled immigration 5.Internal migration and inequality in Italian regions from 2004 to 2012 6.Tax and welfare systems resilience and resilience in human rights 7.Concluding remarks and policy indications

5. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 5 THE FISCAL IMPACT OF IMMIGRATION SOME RECENT STUDIES o Rowthorn R. (2008), The fiscal impact of immigration on the advanced economies. o Moreno Fuentes F.J., Bruquetas Callejo M. (2011), Immigration and the Welfare state in Spain. o Goldin I., Cameron G., Balarajan M. (2011), Exceptional People: How Migration Shaped Our World and Will Define Our Future. o Benvenuti V., Stuppini A. (2012), L’impatto fiscale dell’immigrazione nel 2010, “Diritto, immigrazione e cittadinanza”, 14(2), 62-72. o Camarota S.A. (2013), The Fiscal and Economic Impact of Immigration on the United States. o Chojnicki X. (2013), The Fiscal Impact of Immigration in France: A Generational Accounting Approach, “The World Economy”, 36(8), 1065-1090. o OECD (2013), The fiscal impact of immigration in OECD countries. o Vargas-Silva C. (2014), The Fiscal Impact of Immigration in the UK. o Rowthorn R. (2014), Large-scale Immigration: Its economic and demographic consequences, CIVITAS, London. o IMF (2016), The Refugee Surge in Europe: Economic Challenges, SDN/16/02.

6. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 6 HIGH/LOW SKILLED MIGRATION AND ITS EFFECT ON INCOME INEQUALITY THE RELATIONSHIP BETWEEN MIGRATION AND INCOME INEQUALITY IN THE DESTINATION COUNTRIES/AREAS o Borjas G.J., Freeman R., Katz L. (1992), On The Labor Market Effects of Immigration and Trade, in Borjas, Freeman (eds., 1992), 213-44: the growth of unskilled migration may exacerbate the income gap between the native workers more educated and those less educated (drop out). o Kahanec M., Zimmermann K.F. (2008), International Migration, Ethnicity and Economic Inequality, Discussion Paper IZA DP No. 3450, April: immigration generates an equalising effect, namely a smoothing gaps effect, especially when the levels of education and professional experience of immigrants are very high. o Peri G. (2014), Do immigrant workers depress the wages of native workers?, “IZA World of Labor”, 42, 1-10: Peri’s analysis confirms that most studies for industrialized countries have found, on average, no effect on the wages of native workers (the average estimated wage effect ranges from – 0.8 to + 0.8) and no significant difference in estimated wage effects between less educated native workers and all native workers.

7. 7 The Gini coefficient as a function of the share of labor force with upper secondary or higher education Source: Kahanec - Zimmermann (2014). The Gini coefficient as a function of the share of labor force with post-secondary or higher education The share of labor force with upper secondary or higher education as a function of the share of foreigners in the labor force The share of labor force with post-secondary or higher education as a function of the share of foreigners in the labor force ECONOMIC INEQUALITY, THE QUALITY OF THE LABOR FORCE, AND INTERNATIONAL MIGRATION

8. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 8 IMMIGRATION AND INCOME INEQUALITY IN THE AMERICAN STATES Xu P., Garand J.C. and Zhu L. (Imported Inequality? Immigration and Income Inequality in the American States, “State Politics & Policy Quarterly”, 2015, 1- 25) explore the possibility that some type of immigrants may contribute more to higher income inequality than other immigrants. They have analysed the impact of immigration on income inequality by using pooled cross-sectional time-series data from the American states for the years 1996 to 2008, trying to evaluate the different degree of influence on income inequality exerted by three different types of immigrants: newly admitted LPRs, low-skilled immigrants, and high-skilled immigrants. These scholars have found that the positive relationship between immigration and state income inequality is driven primarily by low-skilled immigrants (rather than high-skilled immigrants).

9. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 9 MIGRATION: POSITIVE OR NEGATIVE EFFECTIVE INSTRUMENT OF REDISTRIBUTION? o Galbraith J.K. (1979), The Nature of Mass Poverty, Harvard University Press, Cambridge: «Migration is the oldest action against poverty. It selects those who most want help. It is good for the country to which they go; it helps break the equilibrium of poverty in the country from which they come. What is the perversity in the human soul that causes people to resist so obvious a good?»  Migration flows can work as an effective instrument of redistribution: o Piketty, T. (2013), Le capital au XXIe siècle, Paris: Edition du Seuil: «La redistribution par l'immigration ne fait que repousser le problème un peu plus loin, mais ne dispense pas de mettre en place les régulations - État social, impôt progressif sur le revenu, impôt progressif sur le capital - qui s'imposent. Il n'est d'ailleurs pas interdit de penser que l'immigration a d'autant plus de chances d'être bien acceptée par les populations les moins favorisées des pays riches que ces institutions font en sorte que les bénéfices économiques de la mondialisation profitent à tous.».

10. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 Pag. 10 THE EQUALISING POWER OF IMMIGRATION THE EFFECTS OF IMMIGRATION ON INCOME INEQUALITY Following the theories of Galbraith (1979), Kahanec and Zimmermann (2008, 2009), and developing further my previous investigation on the equalizing function of migration (Villani, 2015), this paper illustrates how immigration can have positive redistributive effects on regional income inequality; in particular, I found that a positive migration balance may be able to reduce the value of Gini coefficient in those regions which experience relevant immigration flows.

11. THE ITALIAN CASE: THE NEW INTERNAL MIGRATION 11 TRANSFER OF RESIDENCE AMONG ITALIAN MUNICIPALITIES BY REGION IN 2014 Source: ISTAT (2015).

12. Pag. 12 THE ITALIAN CASE: THE NEW INTERNAL MIGRATION TREND IN TRANSFERS OF RESIDENCE The recession has not curbed the transfers of residence from Southern to Northern Italy

13. THE ITALIAN CASE: THE NEW INTERNAL MIGRATION 13 IMMIGRATION AND EMIGRATION BY GENDER AND AGE IN 2014 Young adults and children mainly migrate toward the Center and the North of Italy Notes: Values in thousands. Source: ISTAT (2015). MALESFEMALES AGE

14. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 THE EFFECTS OF INTERNAL MIGRATION ON THE REGIONAL INCOME INEQUALITY Pag. 14 This analysis is structured as follows: 1.exploratory analysis of the variables used in the work; 2.identification and survey of the trends that these variables have had in the time period considered; 3.development of a statistical regression model with panel data; 4.verification of the correct specification of the model through the use of control variables; 5.overview and study of the results obtained.

15. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 THE HYPOTHESIS BEING TESTED AND THE VARIABLES OF THE MODEL Pag. 15 Following the theories of Galbraith (1979), Kahanec and Zimmermann (2008, 2009) set out in the preceding pages, this work attempts to verify whether immigration has positive redistributive effects on regional income inequality; in particular, it tests whether a positive migration balance reduces the value of Gini coefficient in those regions which experience relevant immigration flows. It focus on the following three variables: 1)the regional net migration rate; 2)the regional unemployment rate; 3)the Gini index, used to measure the degree of income inequality existing within individual regions. These data were extracted from the database of ISTAT, the Italian Institute of Statistics.

16. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 THE MODEL Pag. 16 PANEL DATA MODELS ESTIMATED: the first takes into consideration the error term as correlated to the regressors (equation 1) and the second assumes that the former element is not correlated to the second ones (equation 2). Fixed effect model: Random effect model:

17. MIGRATION AND INCOME INEQUALITIES IN ITALY Pag. 17 Impact of MB and Unemployment on regional Gini coefficient The choice of the 2004-2012 period is not random. The paper aims to analyse the relationship between the abovementioned variables at the pre-crisis time and the changes which have been brought about in the post-crisis period.

18. MIGRATION AND INCOME INEQUALITIES IN ITALY Pag. 18 Changes in Gini coefficient and Cumulative MB between 2004 and 2012

19. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 ITALY’S REGIONAL DIVIDE: INCOME INEQUALITY Pag. 19 Percent distribution of households by region and by quintiles of income in 2014 Fonte: Rapporto SVIMEZ 2015 sull’economia del Mezzogiorno.

20. IMMIGRATION POLICIES AND ECONOMIC RESILIENCE The Italian experience teaches us that:  immigration should be considered a resource and used as a tool to enhance “ability to recover” of a country;  the low ability to exploitation of the “resource immigration” in Southern Italy is a mirror of the difficulties of the Southern Economy;  if we aim at promoting the economic growth and increasing the general welfare of the people, THE MONITORING OF MIGRATION can be important for us as much as THE MONITORING OF CHANGES IN THE INEQUALITY OF INCOME. 20

21. EMIGRATION AND INCOME INEQUALITY The Italian experience teaches us that:  EMIGRATION can increase INCOME INEQUALITIES, thus hindering the ECONOMIC GROWTH; THE MIGRATION OF HUMAN CAPITAL can have a negative effect on THE WELFARE AND THE ECONOMIC GROWTH OF COUNTRIES;  such phenomenon cannot and should not be underrated, because it can lead to an automatic increase of economic imbalances existing within the country; underestimating this phenomenon means running the risk to consolidate and accelerate the aforementioned PROCESS OF HUMAN AND INDUSTRIAL DESERTIFICATION OF THE MEZZOGIORNO, as well as its degree of economic underdevelopment and dependence on the rest of the country. 21

22. IMMIGRATION, REDISTRIBUTION AND FISCAL FEDERALISM Furthermore, the Italian experience teaches us that strategic changes in THE STRUCTURE OF THE TAX SYSTEMS, associated to an efficient management of THE WELFARE SYSTEMS and to an certain degree of COORDINATED DECENTRALIZATION OF THE REDISTRIBUTIVE FUNCTION, can be utilised to influence migration flows and, in this way, to bring each region or country to its level of “efficient immigration” (v. Bucovetsky S., Efficient migration and redistribution, “Journal of Public Economics”, 87(11), pages 2459-2474, October 2003) and to the reduction of internal imbalances and inequality in the wealth distribution. 22

23. COMBINING IMMIGRATION AND FINANCIAL POLICIES TO REDUCE POVERTY AND INEQUALITY AND TO REALIZE THE HUMAN RIGHTS 23 Skill-based selection Cultural and socio- economic integration  Progressive fiscal policies  Unifiyng fiscal federalism  Resilience of the tax revenue  Welfare resilience  Efficiency in providing of public services  Infrastructures and facilities building  Resilience of capital expenditures

24. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 THANK YOU FOR YOUR ATTENTION Pag. 24 CONTACTS: Salvatore Villani University of Naples Federico II Via Rodinò, 22; 80138 – Naples (Italy) Phone: +39 081 253 46 53; Fax: +39 081 253 46 53 E-mail: salvatore.villani@unina.it Web site: www.docenti.unina.it/salvatore.villani

25. THE HENRY REVIEW, commissioned by the Rudd Government in 2008 and published in 2010, was the first “root and branch” review of Australia’s tax and transfer system in more than 30 years. The last comprehensive reviews of Australia’s tax and transfer system were completed in 1975. THE ASPREY REVIEW examined the tax system and THE HENDERSON REVIEW examined the social security system. The Review was system wide in scope and long-term in vision, presenting an ambitious blueprint that identifies a range of reform directions. It was intentionally framed in terms of a 40- year vision aimed at identifying reform pathways for emerging medium and long-term challenges facing Australia. 25 WHAT MAKES A RESILIENT TAX SYSTEM?

26. 26 THE HENRY TAX REVIEW The report made 138 SPECIFIC RECOMMENDATIONS, grouped under NINE BROAD THEMES. 1.Concentrating revenue raising on FOUR EFFICIENT TAX BASES: personal income, business income, private consumption, and economic rents from natural resources and land. Other taxes may be retained if they serve a specific policy purpose such as discouraging smoking or traffic congestion. Taxes fitting into none of these categories should eventually be abolished. 2.Configuring TAXES AND TRANSFERS TO SUPPORT PRODUCTIVITY, PARTICIPATION AND GROWTH. 3.An equitable, transparent and simplified PERSONAL INCOME TAX: a much higher tax-free threshold (around AUD 25,000), only two tax brackets, and a simplification of superannuation, deductions and offsets. 4.A fair, adequate, and work supportive TRANSFER SYSTEM. 5.Integrating CONSUMPTION TAX COMPLIANCE with business systems. 6.Efficient LAND AND RESOURCE TAXATION. 7.Completing RETIREMENT INCOME REFORM and securing AGED CARE. 8.Toward more affordable HOUSING: substantially increase rent assistance*, gradually move to a uniform land tax and remove transfer taxes (stamp duty), and gradually move to a neutral treatment of rental and owner-occupied housing. 9.A more open, understandable and responsive TAX SYSTEM. * Rent assistance is a financial help to people who pay rent.

27. 27 THE HENRY TAX REVIEW THE HENRY REVIEW identified FIVE TAX AND TRANSFER DESIGN PRINCIPLES (Henry K.R. et al., 2010, Australia’s Future Tax System: Report to the Treasurer, Part One, Overview, Commonwealth of Australia, Canberra): 1)EQUITY; 2)EFFICIENCY; 3)SIMPLICITY; 4)SUSTAINABILITY: 5)POLICY CONSISTENCY. «In place of SIMPLICITY, SUSTAINABILITY and POLICY CONSISTENCY we use the single concept of RESILIENCE to indicate a tax system able to operate effectively in the face of social, technological and economic challenges» (Stewart M., Moore A., Whiteford P. and Grafton R.Q., 2015).

28. 28 THE HENRY TAX REVIEW «The TAX SYSTEM needs to be ADAPTABLE to changing economic circumstances LOCALLY and GLOBALLY including changes in the way we do things, technologies and employment, investment and savings patterns. RESILIENCE is A DYNAMIC CONCEPT that aims to capture how the tax and transfer system responds and adapts to address changes in the behaviour of individuals in relation to their family, work, and other economic and social opportunities or misfortunes. (Stewart M., Moore A., Whiteford P. and Grafton R.Q., 2015).

29. WHAT MAKES A RESILIENT TAX SYSTEM? In this view, it is necessary TO ENHANCE THE REDISTRIBUTIVE FUNCTION OF TAX SYSTEMS, bringing them to consider the unequal distribution of “capabilities”, understood in the meaning specified by Sen (1985, 1997, 1999 and 2010), and not only the different availability of financial resources (Gallo, 2007, 2012, 2013 and 2015). 29

30. WHAT MAKES A RESILIENT TAX SYSTEM? TAX SYSTEMS should be RESTRUCTURED, realizing a radical change of perspective, a really Copernican change, which provides: a)a new definition of “wealth”; b)the definition of the “new” inequalities and poverties to identify most effective tools for reducing them (Dovis and Saraceno, 2011); c)the taxation of the individual not only related to the traditional economic indicators (income, consumption and capital), but also connected to new indices of economic capacity and ability-to-pay represented by positions and values (capabilities); d)a balance between the protection of proprietary rights and that of social or human rights, between the merit criterion and the social justice criterion, which is related to the principle of equality at the starting point. 30

31. LIMA DECLARATION ON TAX JUSTICE AND HUMAN RIGHTS 31 «Tax policy is public policy, and so can no longer be treated as a matter of mere technical engineering or be left entirely to the often unaccountable discretion of government. Instead, we call on governments to cultivate transformative social and fiscal compacts, and empower citizen watchdog institutions that have the purpose of subjecting tax policy to the most rigorous standards of transparency, public participation, and meaningful accountability in line with internationally-recognized human rights principles. (…) Existing human rights standards provide a normative justification for a capable and wellresourced state. In order to comply with their obligations to protect and progressively realise economic and social rights, states must use and generate the maximum available resources (especially through sufficient and sustainable taxation) in equitable, non-discriminatory ways.»

32. VILLANI – Income Inequality and Redistribution Policies in the New Era of Migration – Poznan, 2016 THANK YOU FOR YOUR ATTENTION Pag. 32 CONTACTS: Salvatore Villani University of Naples Federico II Via Rodinò, 22; 80138 – Naples (Italy) Phone: +39 081 253 46 53; Fax: +39 081 253 46 53 E-mail: salvatore.villani@unina.it Web site: www.docenti.unina.it/salvatore.villani