Unemployment benefits, risk aversion, and migration incentives
AbstractWith reference to the EU enlargement, a framework is derived which allows the study of the effect of unemployment benefits on the migration decision. While benefits simply increase the expected gain for risk neutral individuals, they work as an insurance device for risk averse migrants; the results for the two groups might differ. Thus, the migration decision is reformulated as monetary lottery. Unsurprisingly, the paper finds that risk averse individuals are less likely to engage in migration. Yet, introducing unemployment benefits also makes them select a different set of countries. The implications of selection and sorting, however, depend crucially on the link between risk aversion and economically important personal characteristics. It is also shown that unemployment benefits give rise to intertemporal trade-offs in migration returns. Copyright Springer-Verlag 2005
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Bibliographic InfoArticle provided by Springer in its journal Journal of Population Economics.
Volume (Year): 18 (2005)
Issue (Month): 1 (01)
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Other versions of this item:
- Heitmueller, Axel, 2002. "Unemployment Benefits, Risk Aversion, and Migration Incentives," IZA Discussion Papers 610, Institute for the Study of Labor (IZA).
- Axel Heitmueller, 2002. "Unemployment Benefits, Risk Aversion, and Migration Incentives," CERT Discussion Papers 0207, Centre for Economic Reform and Transformation, Heriot Watt University.
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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