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Unemployment Benefits and Immigration: Evidence from the EU

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  • Zimmermann, Klaus F.
  • Kahanec, Martin
  • Guzi, Martin
  • Giulietti, Corrado

Abstract

The paper studies the impact of unemployment benefits on immigration. A sample of 19 European countries observed over the period 1993 to 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.

Suggested Citation

  • Zimmermann, Klaus F. & Kahanec, Martin & Guzi, Martin & Giulietti, Corrado, 2011. "Unemployment Benefits and Immigration: Evidence from the EU," CEPR Discussion Papers 8672, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8672
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    More about this item

    Keywords

    Immigration; Unemployment benefit spending; Welfare magnets; European union;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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