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Does migration threaten the sustainability of European welfare states?

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  • Peter Huber
  • Doris A. Oberdabernig

Abstract

We investigate the relative contributions of migrant and native households to welfare states. Using two step Oaxaca-Blinder decompositions that control for selection into bene t take-up, we are able to identify the individual variables contributing to di erences in welfare receipt by native and migrant households. We nd that most of the di erences are explained by observable characteristics such as size of the household as well as age and education of its head and income in some countries. In contrast, signi cantly lower net contributions of migrant households to the state budget persist in many countries even after controlling for observable factors. The reasons for this are primarily lower tax payments of migrant households. Selective migration and sound integration policies and as well as policies avoiding marginalization of migrants in informal labor markets are therefore the most e ective means to avoid scal burdens of migration.

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Bibliographic Info

Paper provided by WWWforEurope in its series WWWforEurope Working Papers series with number 21.

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Length: 135
Date of creation: Jul 2013
Date of revision:
Publication status: published
Handle: RePEc:feu:wfewop:y:2013:m:7:d:0:i:21

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Postal: WWWforEurope Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
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Keywords: Oaxaca-Blinder decomposition; EU-countries; migration; net contributions; welfare state;

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References

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  1. Michele Pellizzari, 2013. "The use of welfare by migrants in Italy," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 34(2), pages 155-166, February.
  2. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  3. George J. Borjas & Lynette Hilton, 1995. "Immigration and the Welfare State: Immigrant Participation in Means- Tested Entitlement Programs," NBER Working Papers 5372, National Bureau of Economic Research, Inc.
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  8. Marianne Bertrand & Erzo F.P. Luttmer & Sendhil Mullainathan, 1999. "Network Effects and Welfare Cultures," JCPR Working Papers, Northwestern University/University of Chicago Joint Center for Poverty Research 62, Northwestern University/University of Chicago Joint Center for Poverty Research.
  9. Storesletten, Kjetil, 2001. "Fiscal Implications of Immigration - A Net Present Value Calculation -," Seminar Papers, Stockholm University, Institute for International Economic Studies 701, Stockholm University, Institute for International Economic Studies.
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  11. Barrett, Alan & McCarthy, Yvonne, 2008. "Immigrants and Welfare Programmes: Exploring the Interactions between Immigrant Characteristics, Immigrant Welfare Dependence and Welfare Policy," IZA Discussion Papers 3494, Institute for the Study of Labor (IZA).
  12. Christian Dustmann & Tommaso Frattini & Caroline Halls, 2009. "Assessing the Fiscal Costs and Benefits of A8 Migration to the UK," CReAM Discussion Paper Series 0918, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  13. Wadensjo, Eskil, 2007. "Immigration and net transfers within the public sector in Denmark," European Journal of Political Economy, Elsevier, vol. 23(2), pages 472-485, June.
  14. Thomas Bauer & Mathias Sinning, 2008. "An extension of the Blinder–Oaxaca decomposition to nonlinear models," AStA Advances in Statistical Analysis, Springer, Springer, vol. 92(2), pages 197-206, May.
  15. Daniel A. Powers & Hirotoshi Yoshioka & Myeong-Su Yun, 2011. "mvdcmp: Multivariate decomposition for nonlinear response models," Stata Journal, StataCorp LP, StataCorp LP, vol. 11(4), pages 556-576, December.
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Cited by:
  1. Karl Aiginger & Kurt Kratena & Margit Schratzenstaller & Teresa Weiss, 2014. "Moving towards a new growth model," WWWforEurope Deliverables series 3, WWWforEurope.

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