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 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 rather ambiguous.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 610.
Length: 35 pages
Date of creation: Oct 2002
Date of revision:
Publication status: published in: Journal of Population Economics, 2005, 18(1), 93-112
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Other versions of this item:
- Axel Heitmueller, 2005. "Unemployment benefits, risk aversion, and migration incentives," Journal of Population Economics, Springer, vol. 18(1), pages 93-112, 01.
- 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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