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Welfare Migration in Europe and the Cost of a Harmonised Social Assistance

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  • De Giorgi, Giacomo

    ()
    (Stanford University)

  • Pellizzari, Michele

    ()
    (University of Geneva)

Abstract

The enlargement of the European Union has increased concerns about the role of generous welfare transfers in attracting migrants. This paper explores the issue of welfare migration across the 15 countries of the pre-enlargement Union and finds a significant but small effect of the generosity of welfare on migration decisions. This effect, however, is still large enough to distort the distribution of migration flows and, possibly, offset the potential benefits of migration as an inflow of mobile labour into countries with traditionally sedentary native workers. A possible way to eliminate these distortions is the harmonisation of welfare at the level of the Union. The second part of the paper estimates the costs and benefits of what could be a first step in this direction: the introduction of a uniform European minimum income. The results show that, for a realistic minimum income threshold, the new system would cost about three quarters of what is currently spent on housing and social assistance benefits. Despite its reasonable cost, the distribution of net donors and net receivers across countries is such that the actual implementation of this system would be politically problematic.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2094.

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Length: 40 pages
Date of creation: Apr 2006
Date of revision:
Publication status: published in: Labour Economics, 2009, 16 (4), 353-363
Handle: RePEc:iza:izadps:dp2094

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Keywords: welfare state; migration; EU enlargement;

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References

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  1. Kennan,J. & Walker,J.R., 2003. "The effect of expected income on individual migration decisions," Working papers 7, Wisconsin Madison - Social Systems.
  2. Borjas, George J, 1999. "Immigration and Welfare Magnets," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 607-37, October.
  3. Enchautegui, Maria E, 1997. "Welfare Payments and Other Economic Determinants of Female Migration," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 529-54, July.
  4. Sinn, Hans-Werner, 1999. "EU Enlargement, Migration and Lessons from German Unification," CEPR Discussion Papers 2174, C.E.P.R. Discussion Papers.
  5. Blank, Rebecca M., 1988. "The effect of welfare and wage levels on the location decisions of female-headed households," Journal of Urban Economics, Elsevier, vol. 24(2), pages 186-211, September.
  6. Hans-Werner Sinn, 2004. "EU Enlargement, Migration and the New Constitution," CESifo Working Paper Series 1367, CESifo Group Munich.
  7. P. B. Levine & D. J. Zimmerman, . "An empirical analysis of the welfare magnet debate using the NLSY," Institute for Research on Poverty Discussion Papers 1098-96, University of Wisconsin Institute for Research on Poverty.
  8. Boeri, Tito & Hanson, Gordon H. & McCormick, Barry (ed.), 2002. "Immigration Policy and the Welfare System: A Report for the Fondazione Rodolfo Debenedetti," OUP Catalogue, Oxford University Press, number 9780199256310, Octomber.
  9. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  10. Edward M. Gramlich & Deborah S. Laren, 1984. "Migration and Income Redistribution Responsibilities," Journal of Human Resources, University of Wisconsin Press, vol. 19(4), pages 489-511.
  11. Terra McKinnish, 2005. "Importing the Poor: Welfare Magnetism and Cross-Border Welfare Migration," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  12. Jonah B. Gelbach, 2004. "Migration, the Life Cycle, and State Benefits: How Low Is the Bottom?," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1091-1130, October.
  13. Bartel, Ann P, 1989. "Where Do the New U.S. Immigrants Live?," Journal of Labor Economics, University of Chicago Press, vol. 7(4), pages 371-91, October.
  14. Assaf Razin & Efraim Sadka, 2000. "Interactions between International Migration and the Welfare State," CESifo Working Paper Series 337, CESifo Group Munich.
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Citations

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Cited by:
  1. Brenke, Karl & Yuksel, Mutlu & Zimmermann, Klaus F., 2009. "EU Enlargement under Continued Mobility Restrictions: Consequences for the German Labor Market," CEPR Discussion Papers 7274, C.E.P.R. Discussion Papers.
  2. Gordon H. Hanson, 2009. "The Governance of Migration Policy," Human Development Research Papers (2009 to present) HDRP-2009-02, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Apr 2009.
  3. Boeri, Tito, 2009. "Immigration to the Land of Redistribution," IZA Discussion Papers 4273, Institute for the Study of Labor (IZA).
  4. Assaf Razin & Efraim Sadka & Benjarong Suwankiri, 2009. "Migration and the welfare state: Dynamic Political-Economy Theory," NBER Working Papers 14784, National Bureau of Economic Research, Inc.
  5. Kahanec, Martin & Zimmermann, Klaus F., 2009. "Migration in an enlarged EU: A challenging solution?," CEPR Discussion Papers 7200, C.E.P.R. Discussion Papers.
  6. Cohen, Alon & Razin, Assaf, 2008. "The Skill Composition of Immigrants and the Generosity of the Welfare State: Free vs. Policy-Controlled Migration," CEPR Discussion Papers 7034, C.E.P.R. Discussion Papers.
  7. Una Okonkwo Osili & Jia Xie, 2009. "Do Immigrants and Their Children Free Ride More Than Natives?," American Economic Review, American Economic Association, vol. 99(2), pages 28-34, May.
  8. Jana Tepperová & Stanislav Klazar, 2012. "The Impact of Social Systems and their Coordination on Economic Migration," Politická ekonomie, University of Economics, Prague, vol. 2012(4), pages 505-522.

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