Working Paper: NBER ID: w26454
Authors: Ole Agersnap; Amalie Sofie Jensen; Henrik Kleven
Abstract: We study the effects of welfare generosity on international migration using reforms of immigrant welfare benefits in Denmark. The first reform, implemented in 2002, lowered benefits for non-EU immigrants by about 50%, with no changes for natives or EU immigrants. The policy was later repealed and re-introduced. Based on a quasi-experimental research design, we find sizeable effects: the benefit reduction reduced the net flow of immigrants by about 5,000 people per year, and the subsequent repeal of the policy reversed the effect almost exactly. The implied elasticity of migration with respect to benefits equals 1.3. This represents some of the first causal evidence on the welfare magnet hypothesis.
Keywords: Welfare magnet hypothesis; Immigration; Denmark; Welfare benefits
JEL Codes: H20; H31; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction of welfare benefits for non-EU immigrants in Denmark (2002) (H53) | Decrease in the net flow of immigrants (F22) |
| Reduction of welfare benefits for non-EU immigrants in Denmark (2002) (H53) | Decrease in net immigration elasticity of 1.3 (J11) |
| Repeal of welfare cuts in 2012 (I38) | Reversal of immigration flow (F22) |
| Welfare benefit reforms (I38) | Changes in immigration flows (F22) |
| Welfare benefit reforms (I38) | Divergence in immigration flows from EU and non-EU (F29) |
| Welfare benefit reforms (I38) | Migration to Denmark declined relative to other Nordic countries (J69) |