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Unemployment Benefits and Immigration: Evidence from the EU

  • Giulietti, Corrado

    ()

    (IZA)

  • Guzi, Martin

    ()

    (Masaryk University)

  • Kahanec, Martin

    ()

    (Central European University)

  • Zimmermann, Klaus F.

    ()

    (IZA and University of Bonn)

The paper studies the impact of unemployment benefits on immigration. A sample of 19 European countries observed over the period 1993-2008 is used to test the hypothesis that unemployment benefit spending (UBS) is correlated with immigration flows from EU and non-EU origins. While OLS estimates reveal the existence of a moderate correlation for non-EU immigrants only, IV and GMM techniques used to address endogeneity issues yield, respectively, a much smaller and an essentially zero causal impact of UBS on immigration. All estimates for immigrants from EU origins indicate that flows within the EU are not related to unemployment benefit generosity. This suggests that the so-called "welfare migration" debate is misguided and not based on empirical evidence.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6075.

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Length: 19 pages
Date of creation: Oct 2011
Date of revision:
Publication status: published in: International Journal of Manpower, 2013, 34 (1), 24-38, Article
Handle: RePEc:iza:izadps:dp6075
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  1. Borjas, George J, 1999. "Immigration and Welfare Magnets," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 607-37, October.
  2. Nannestad, Peter, 2007. "Immigration and welfare states: A survey of 15 years of research," European Journal of Political Economy, Elsevier, vol. 23(2), pages 512-532, June.
  3. Lubomira Anastassova & Teodora Paligorova, 2005. "Why Immigrants Manage to Grab More SocialBenefits? Empirical Cross - Country Analysis," CERGE-EI Working Papers wp263, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  4. Alan Barrett & Bertrand MaƮtre, 2013. "Immigrant welfare receipt across Europe," International Journal of Manpower, Emerald Group Publishing, vol. 34(1), pages 8-23, January.
  5. Razin, A. & Sadka, E. & Swagel, P., 1998. "Tax Burden and Migration: a Political Economy Theory and Evidence," Papers 15-98, Tel Aviv.
  6. Heitmueller, Axel, 2002. "Unemployment Benefits, Risk Aversion, and Migration Incentives," IZA Discussion Papers 610, Institute for the Study of Labor (IZA).
  7. Roberto Perotti & Massimo V. Rostagno & Gian-Maria Milesi-Ferretti, 2001. "Electoral System and Public Spending," IMF Working Papers 01/22, International Monetary Fund.
  8. Pedersen, Peder J. & Pytlikova, Mariola & Smith, Nina, 2008. "Selection and network effects--Migration flows into OECD countries 1990-2000," European Economic Review, Elsevier, vol. 52(7), pages 1160-1186, October.
  9. De Giorgi, Giacomo & Pellizzari, Michele, 2009. "Welfare migration in Europe," Labour Economics, Elsevier, vol. 16(4), pages 353-363, August.
  10. Alon Cohen & Assaf Razin & Efraim Sadka, 2009. "The Skill Composition of Migration and the Generosity of the Welfare State," NBER Working Papers 14738, National Bureau of Economic Research, Inc.
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