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The Welfare Magnet Hypothesis: Evidence From an Immigrant Welfare Scheme in Denmark

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  • Ole Agersnap
  • Amalie Sofie Jensen
  • Henrik Kleven

Abstract

We study the effects of welfare generosity on international migration using reforms of immigrant welfare benefits in Denmark. The first reform, implemented in 2002, lowered benefits for non-EU immigrants by about 50%, with no changes for natives or EU immigrants. The policy was later repealed and re-introduced. Based on a quasi-experimental research design, we find sizeable effects: the benefit reduction reduced the net flow of immigrants by about 5,000 people per year, and the subsequent repeal of the policy reversed the effect almost exactly. The implied elasticity of migration with respect to benefits equals 1.3. This represents some of the first causal evidence on the welfare magnet hypothesis.

Suggested Citation

  • Ole Agersnap & Amalie Sofie Jensen & Henrik Kleven, 2019. "The Welfare Magnet Hypothesis: Evidence From an Immigrant Welfare Scheme in Denmark," NBER Working Papers 26454, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26454
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    Cited by:

    1. Mathilde Muñoz, 2021. "Do European Top Earners React to Labour Taxation Through Migration ?," PSE Working Papers halshs-03252899, HAL.
    2. Cevat Giray Aksoy & Panu Poutvaara, 2019. "Refugees' and Irregular Migrants' Self-Selection into Europe: Who Migrates Where?," CESifo Working Paper Series 7781, CESifo.
    3. Henrik Kleven & Camille Landais & Mathilde Muñoz & Stefanie Stantcheva, 2020. "Taxation and Migration: Evidence and Policy Implications," Journal of Economic Perspectives, American Economic Association, vol. 34(2), pages 119-142, Spring.
    4. Zachary Parolin & Janet Gornick, 2021. "Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles," LIS Working papers 802, LIS Cross-National Data Center in Luxembourg.
    5. Richard J. Cebula & Mpaza Kapembwa & Usha Nair‐Reichert, 2021. "Location choices of undocumented migrants: Does access to higher public education matter?," Growth and Change, Wiley Blackwell, vol. 52(1), pages 167-194, March.
    6. Fanny Dellinger & Peter Huber, 2021. "The Impact of Welfare Benefits on the Location Choice of Refugees. Testing the Welfare Magnet Hypothesis," WIFO Working Papers 626, WIFO.
    7. Mathilde Muñoz, 2021. "Do European Top Earners React to Labour Taxation Through Migration ?," Working Papers halshs-03252899, HAL.
    8. Jacob Nielsen Arendt & Iben Bolvig & Mette Foged & Linea Hasager & Giovanni Peri, 2020. "Language Training and Refugees' Integration," NBER Working Papers 26834, National Bureau of Economic Research, Inc.
    9. Klöcker, J.A. & Daumann, F., 2023. "What drives migration to Germany? A panel data analysis," Research in Economics, Elsevier, vol. 77(2), pages 251-264.
    10. Jin, Zhangfeng, 2020. "Welfare Magnets and Internal Migration in China," GLO Discussion Paper Series 498, Global Labor Organization (GLO).
    11. Heidland, Tobias & Jannsen, Nils & Groll, Dominik & Kalweit, René & Boockmann, Bernhard, 2021. "Analyse und Prognose von Migrationsbewegungen," Kieler Beiträge zur Wirtschaftspolitik 34, Kiel Institute for the World Economy (IfW Kiel).
    12. Konstantinos Matakos & Riikka Savolainen & Janne Tukiainen, 2020. "Refugee Migration and the Politics of Redistribution: Do Supply and Demand Meet?," Discussion Papers 132, Aboa Centre for Economics.
    13. Parolin, Zachary & Gornick, Janet C., 2021. "Pathways toward Inclusive Income Growth: A Comparative Decomposition of National Growth Profiles," SocArXiv rsxz6, Center for Open Science.

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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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