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Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity

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  • Assaf Razin

    () (Tel Aviv University and Cornell University, CEPR, NBER, and CES-ifo)

  • Jackline Wahba

    () (University of Southampton, CPC and IZA.)

Abstract

This paper revisits the magnet hypothesis and investigates the impact of the welfare generosity on the difference between skilled and unskilled migration rates. The main purpose of the paper is to assess the role of mobility restriction on shaping the effect of the welfare state generosity. In a free migration regime, the impact is expected to be negative on the skill composition of migrants while in a restricted mobility regime, the impact will be the opposite, as voters will prefer selective migration policies, favoring skilled migrants who tend to be net contributors to the fiscal system. We utilize the free labor movement within EUR (the EU, Norway and Switzerland) and the restricted movement from outside of the EUR to compare the free migration regime to the restricted migration regime. We find strong support for the "magnet hypothesis" under the free-migration regime, and the "fiscal burden hypothesis" under the restricted-migration regime even after controlling for differences in educational quality and returns to skills in source and host countries.

Suggested Citation

  • Assaf Razin & Jackline Wahba, 2012. "Welfare Magnet Hypothesis, Fiscal Burden and Immigration Skill Selectivity," Norface Discussion Paper Series 2012036, Norface Research Programme on Migration, Department of Economics, University College London.
  • Handle: RePEc:nor:wpaper:2012036
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F0 - International Economics - - General
    • F2 - International Economics - - International Factor Movements and International Business
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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