The Welfare Magnet Hypothesis: Evidence from an Immigrant Welfare Scheme in Denmark
American Economic Review: Insights
vol. 2,
no. 4, December 2020
(pp. 527-42)
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 percent, with no changes for natives or EU immigrants. The policy was later repealed and reintroduced. Based on a quasi-experimental research design, we find sizable 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.Citation
Agersnap, Ole, Amalie Jensen, and Henrik Kleven. 2020. "The Welfare Magnet Hypothesis: Evidence from an Immigrant Welfare Scheme in Denmark." American Economic Review: Insights, 2 (4): 527-42. DOI: 10.1257/aeri.20190510Additional Materials
JEL Classification
- F22 International Migration
- H53 National Government Expenditures and Welfare Programs
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination