The role of non-contributory pensions on internal mobility in Spain

Spain is one of the Southern European nations characterized by very low inter-provincial mobility rates despite large inter-regional unemployment rate differences. We examine whether non-contributory pensions – an increasingly important component of many welfare systems, have curtailed the internal migration of younger cohorts over the past three decades. Using changes in the number of beneficiaries brought about by a policy reform in 1991, we show that old-age non-contributory pensions are associated with reduced internal migration of 25-to-35 year old men and women with less human capital. The effects do not appear to be driven by intergenerational reciprocity or quid pro quo exchanges, and do not extend to other types of pensions, hinting on systematic employment barriers faced by younger, less educated, or unexperienced men and women from lower income households qualifying for these pensions. The ability to rely on the support from older family members residing nearby might provide a lifeline but, simultaneously, curtail their propensity to out-migrate.