IDEAS home Printed from https://ideas.repec.org/p/zbw/fubsbe/20138.html
   My bibliography  Save this paper

"Welfare magnetism" in the EU-15? Why the EU enlargement did not start a race to the bottom of welfare states

Author

Listed:
  • Skupnik, Christoph

Abstract

According to the welfare magnet hypothesis, migrants with a high likelihood of claiming benefits cluster in the most generous welfare systems. After the introduction of the freedom of movement for Eastern European workers, EU-15 countries can thus be expected to reduce public benefits in order to avoid becoming welfare magnets. However, OECD data on benefits do not support the prediction of a race to the bottom in protection levels. Using data from the EU-LFS 2004 to 2011, I analyze the determinants of migration flows and find that, in contrast to theory, welfare state variables do not significantly affect migration flows when controlling for temporary political restrictions of the freedom of movement (2+3+2 rule). This explains why the pressure to modify national welfare spending is small. Furthermore, evidence is found that the restrictions completely offset the incentive effects of work-related pull factors and thereby hamper an efficient allocation of labor across national borders.

Suggested Citation

  • Skupnik, Christoph, 2013. ""Welfare magnetism" in the EU-15? Why the EU enlargement did not start a race to the bottom of welfare states," Discussion Papers 2013/8, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:20138
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/76883/1/751711640.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Christian Dustmann & Tommaso Frattini & Caroline Halls, 2010. "Assessing the Fiscal Costs and Benefits of A8 Migration to the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 31(1), pages 1-41, March.
    2. repec:bla:scotjp:v:49:y:2002:i:1:p:104-15 is not listed on IDEAS
    3. Thompson, Samuel B., 2011. "Simple formulas for standard errors that cluster by both firm and time," Journal of Financial Economics, Elsevier, vol. 99(1), pages 1-10, January.
    4. Dr Tatiana Fic & Ana Rincon-Aznar & Lucy Stokes & Dawn Holland, 2011. "Labour mobility within the EU," National Institute of Economic and Social Research (NIESR) Discussion Papers 379, National Institute of Economic and Social Research.
    5. Hans–Werner Sinn, 2002. "EU Enlargement and the Future of the Welfare State," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(1), pages 104-115, February.
    6. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    7. Anzelika Zaiceva & Klaus F. Zimmermann, 2008. "Scale, diversity, and determinants of labour migration in Europe," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(3), pages 428-452, Autumn.
    8. Dr Tatiana Fic & Ana Rincon-Aznar & Lucy Stokes & Dawn Holland, 2011. "Labour mobility within the EU," National Institute of Economic and Social Research (NIESR) Discussion Papers 379, National Institute of Economic and Social Research.
    9. 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.
    10. Michael Fertig, 2001. "The economic impact of EU-enlargement: assessing the migration potential," Empirical Economics, Springer, vol. 26(4), pages 707-720.
    11. Corrado Giulietti & Jackline Wahba, 2013. "Welfare migration," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 26, pages 489-504, Edward Elgar Publishing.
    12. Graves, Philip E., 1980. "Migration and climate," MPRA Paper 19916, University Library of Munich, Germany.
    13. Gaston, Noel & Rajaguru, Gulasekaran, 2013. "International migration and the welfare state revisited," European Journal of Political Economy, Elsevier, vol. 29(C), pages 90-101.
    14. 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.
    15. Anna Mayda, 2010. "International migration: a panel data analysis of the determinants of bilateral flows," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1249-1274, September.
    16. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
    17. Drinkwater, Stephen & Eade, John & Garapich, Michal, 2006. "Poles Apart? EU Enlargement and the Labour Market Outcomes of Immigrants in the UK," IZA Discussion Papers 2410, Institute of Labor Economics (IZA).
    18. Borjas, George J, 1999. "Immigration and Welfare Magnets," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 607-637, October.
    19. De Giorgi, Giacomo & Pellizzari, Michele, 2009. "Welfare migration in Europe," Labour Economics, Elsevier, vol. 16(4), pages 353-363, August.
    20. Tito Boeri & Herbert Brücker, 2001. "Eastern Enlargement and EU Labour Markets," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 2(1), pages 49-68, January.
    21. Chiswick, Barry R., 1999. "Are Immigrants Favorably Self-Selected? An Economic Analysis," Working Papers 147, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    22. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    23. Razin, Assaf & Wahba, Jackline, 2011. "Free vs. Restricted Immigration: Bilateral Country Study," IZA Discussion Papers 5546, Institute of Labor Economics (IZA).
    24. Neeraj Kaushal, 2005. "New Immigrants' Location Choices: Magnets without Welfare," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 59-80, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Matthew J. Bloomfield & Ulf Brüggemann & Hans B. Christensen & Christian Leuz, 2017. "The Effect of Regulatory Harmonization on Cross‐Border Labor Migration: Evidence from the Accounting Profession," Journal of Accounting Research, Wiley Blackwell, vol. 55(1), pages 35-78, March.
    2. Giuranno Michele G. & Biswas Rongili, 2019. "Internal Migration and Public Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-16, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christoph Skupnik, 2014. "EU enlargement and the race to the bottom of welfare states," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-21, December.
    2. Zaiceva, A. & Zimmermann, K.F., 2016. "Migration and the Demographic Shift," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 119-177, Elsevier.
    3. Paweł Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," RSCAS Working Papers 2013/79, European University Institute.
    4. Giuseppe Bertola & John Driffill & Harold James & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi, 2015. "Chapter 4:Migration in the European Union: Too much of a goodthing?," EEAG Report on the European Economy, CESifo, vol. 0, pages 78-96, February.
    5. Martin Kahanec, 2013. "Labor mobility in an enlarged European Union," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 7, pages 137-152, Edward Elgar Publishing.
    6. Kaczmarczyk, Pawel, 2015. "Burden or Relief? Fiscal Impacts of Recent Ukrainian Migration to Poland," IZA Discussion Papers 8779, Institute of Labor Economics (IZA).
    7. Kahanec, Martin, 2012. "Skilled Labor Flows: Lessons from the European Union," IZA Research Reports 49, Institute of Labor Economics (IZA).
    8. Bettin, Giulia & Sacchi, Agnese, 2020. "Health spending in Italy: The impact of immigrants," European Journal of Political Economy, Elsevier, vol. 65(C).
    9. Boeri, Tito & Brücker, Herbert, 2005. "Migration, Co-ordination Failures and EU Enlargement," IZA Discussion Papers 1600, Institute of Labor Economics (IZA).
    10. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    11. Jens Ruhose, 2015. "Microeconometric Analyses on Economic Consequences of Selective Migration," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 61.
    12. Corrado Giulietti & Jackline Wahba, 2013. "Welfare migration," Chapters, in: Amelie F. Constant & Klaus F. Zimmermann (ed.), International Handbook on the Economics of Migration, chapter 26, pages 489-504, Edward Elgar Publishing.
    13. Ian Preston, 2014. "The Effect of Immigration on Public Finances," Economic Journal, Royal Economic Society, vol. 124(580), pages 569-592, November.
    14. Giuseppe Bertola & John Driffill & Harold James & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi, 2015. "The EEAG Report on the European Economy 2015: Blurring the Borders," EEAG Report on the European Economy, CESifo, vol. 0, pages 1-108, February.
    15. Michael Fertig & Martin Kahanec, 2013. "Mobility in an enlarging European Union: Projections of potential flows from EU's eastern neighbors and Croatia," Discussion Papers 18, Central European Labour Studies Institute (CELSI).
    16. Michael Fertig & Martin Kahanec, 2015. "Projections of potential flows to the enlarging EU from Ukraine, Croatia and other Eastern neighbors," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-27, December.
    17. Martin Kahanec & Martin Guzi, 2023. "Welfare Migration," Discussion Papers 65, Central European Labour Studies Institute (CELSI).
    18. Brücker, Herbert & Bertoli, Simone & Fernández-Huertas Moraga, Jesús, 2013. "The European Crisis and Migration to Germany: Expectations and the Diversion of Migration Flows," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79693, Verein für Socialpolitik / German Economic Association.
    19. repec:hal:spmain:info:hdl:2441/2tlvpn71ve888pnch88db9g683 is not listed on IDEAS
    20. Dowon Kim & Dongwon Lee, 2021. "Immigration and the pattern of public spending: evidence from OECD countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(4), pages 1014-1034, August.
    21. Vasily Astrov & Mario Holzner & Stefan Jestl & Michael Landesmann & Isilda Mara & Roman Römisch & Robert Stehrer & Hermine Vidovic, 2019. "Bevölkerungs- und Wirtschaftsentwicklung in den mittel- und osteuropäischen Ländern," wiiw Research Reports in German language 13, The Vienna Institute for International Economic Studies, wiiw.

    More about this item

    Keywords

    Determinants of migration flows; EU enlargement; welfare magnet;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:fubsbe:20138. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwfubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.