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Unemployment Benefits, Risk Aversion, and Migration Incentives

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Author Info
Axel Heitmueller

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Abstract

With 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 and a utility function exhibiting constant relative risk aversion is applied. The model suggests increased migration incentives independent of taste and a positive selection of risk neutral individuals. Furthermore, risk averse migrants are likely to be found in countries with more evenly distributed incomes, other things equal. While the calibration of the model shows a significant change in migration incentives, empirical results on aggregate data for South-North migration within the EU are ambiguous.

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Publisher Info
Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 0207.

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Date of creation: 2002
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Handle: RePEc:hwe:certdp:0207

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Related research
Keywords: migration; welfare benefits; risk aversion; fixed effects;

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Find related papers by JEL classification:
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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. McCall, B P & McCall, J J, 1987. "A Sequential Study of Migration and Job Search," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 452-76, October. [Downloadable!] (restricted)
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  3. Michael Fertig, 2001. "The economic impact of EU-enlargement: assessing the migration potential," Empirical Economics, Springer, vol. 26(4), pages 707-720. [Downloadable!] (restricted)
  4. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CES, MSH, vol. 12(24), pages 125-176, 04. [Downloadable!] (restricted)
  5. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October. [Downloadable!] (restricted)
  6. Ralph Rotte & Michael Vogler, 2000. "The effects of development on migration: Theoretical issues and new empirical evidence," Journal of Population Economics, Springer, vol. 13(3), pages 485-508. [Downloadable!] (restricted)
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  7. Fertig, Michael & Schmidt, Christoph M., 2000. "Aggregate-Level Migration Studies as a Tool for Forecasting Future Migration Streams," IZA Discussion Papers 183, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Gunther Maier, 1985. "Cumulative causation and selectivity in labour market oriented migration caused by imperfect information," Regional Studies, Taylor and Francis Journals, vol. 19(3), pages 231-241, June. [Downloadable!] (restricted)
  9. Fertig, Michael & Schmidt, Christoph M., 2001. "First- and Second-Generation Migrants in Germany - What Do We Know and What Do People Think," IZA Discussion Papers 286, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Thomas Bauer & Klaus F. Zimmermann, 1999. "Assessment of Possible Migration Pressure and its Labour Market Impact Following EU Enlargement to Central and Eastern Europe," IZA Research Reports 3, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Bird, Edward J. & Kayser, Hilke & Frick, Joachim R. & Wagner, Gert G., 1999. "The Immigrant Welfare Effect: Take-Up or Eligibility?," IZA Discussion Papers 66, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Levy, Mildred B & Wadycki, Walter J, 1973. "The Influence of Family and Friends on Geographic Labor Mobility: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 55(2), pages 198-203, May. [Downloadable!] (restricted)
  13. Molho, Ian, 1986. "Theories of Migration: A Review," Scottish Journal of Political Economy, Scottish Economic Society, vol. 33(4), pages 396-419, November.
  14. Siegfried Berninghaus & Hans Günther Seifert-Vogt, 1987. "International Migration under Incomplete Information," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 123(II), pages 199-218, June. [Downloadable!]
  15. Donkers, B. & Melenberg, B. & Soest, A.van, 1999. "Estimating risk attitudes using lotteries : a large sample approach," Discussion Paper 12, Tilburg University, Center for Economic Research. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Chen, Natalie & Conconi, Paola & Perroni, Carlo, 2007. "Does Migration Empower Married Women?," The Warwick Economics Research Paper Series (TWERPS) 812, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  2. Rob Euwals & Jaco Dagevos & Mérove Gijsberts & Hans Roodenburg, 2007. "Immigration, Integration and the Labour Market: Turkish Immigrants in Germany and the Netherlands," IZA Discussion Papers 2677, Institute for the Study of Labor (IZA). [Downloadable!]
  3. David A. Jaeger & Holger Bonin & Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2007. "Direct Evidence on Risk Attitudes and Migration," CReAM Discussion Paper Series 0703, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London. [Downloadable!]
    Other versions:
  4. Rob Euwals & Jaco Dagevos & Mérove Gijsberts & Hans Roodenburg, 2006. "Immigration, Integration and the Labour Market," CPB Discussion Papers 75, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  5. Holger Bonin & Amelie Constant & Konstantinos Tatsiramos & Klaus F. Zimmermann, 2006. "Native-Migrant Differences in Risk Attitudes," Discussion Papers of DIW Berlin 560, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
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