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The Impact of Welfare Benefits on the Location Choice of Refugees. Testing the Welfare Magnet Hypothesis

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  • Fanny Dellinger

    (WIFO)

  • Peter Huber

Abstract

This paper analyses the influence of welfare benefit levels on migrants' location choices within their host country and thus provides a rare empirical test of the Welfare Magnet Hypothesis. In Austria, asylum seekers are distributed across federal states according to a quota, but once they are granted protection, they are free to move wherever they want. Welfare benefit levels for refugees vary over states depending on a person's protection status and – due to a series of welfare benefit reforms at the state level – over time. This institutional structure allows to causally identify the effect of welfare benefit differentials on refugees' first autonomous location choice. We employ two complementary identification strategies, the first is based on variation over states and protection-status groups. The second is based on the welfare reforms at the state level and exploits variation over states, groups and time. The results provide evidence in favour of the Welfare Magnet Hypothesis.

Suggested Citation

  • 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.
    • Handle: RePEc:wfo:wpaper:y:2021:i:626
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    File URL: https://www.wifo.ac.at/wwa/pubid/66878
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    References listed on IDEAS

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    Cited by:

    1. Martin Kahanec & Martin Guzi, 2023. "Welfare Migration," Discussion Papers 65, Central European Labour Studies Institute (CELSI).
    2. Liliana Harding & Ciprian Panzaru, 2024. "How Transit Countries Become Refugee Destinations: Insights from Central and Eastern Europe," Papers 2411.08350, arXiv.org.
    3. Ferwerda, Jeremy & Marbach, Moritz & Hangartner, Dominik, 2022. "Do Immigrants Move to Welfare? Subnational Evidence from Switzerland," OSF Preprints a8rzx, Center for Open Science.
    4. Vassil Kirov & Lucia Kováčová & Martin Guzi & Jan Czarzasty & Dragoș Adăscăliței & Martin Kahanec, 2023. "Preserving Jobs in COVID-19 Times in CEE Countries: Social Partners’ Responses and Actions," Discussion Papers 66, Central European Labour Studies Institute (CELSI).
    5. Fanny Dellinger, 2021. "Housing Support Policies and Refugees' Labor Market Integration in Austria," Working Papers 2021-32, Faculty of Economics and Statistics, Universität Innsbruck.

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    Keywords

    Natural Experiment; Refugees; The Welfare Magnet Hypothesis;
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