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

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  • Ole Agersnap
  • Amalie 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 percent, with no changes for natives or EU immigrants. The policy was later repealed and reintroduced. Based on a quasi-experimental research design, we find sizable 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 Jensen & Henrik Kleven, 2020. "The Welfare Magnet Hypothesis: Evidence from an Immigrant Welfare Scheme in Denmark," American Economic Review: Insights, American Economic Association, vol. 2(4), pages 527-542, December.
    • Handle: RePEc:aea:aerins:v:2:y:2020:i:4:p:527-42
    DOI: 10.1257/aeri.20190510
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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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