Discussion Papers

Welfare Migration


Welfare Migration

Authors: Kahanec, M. and Guzi, M.
Published: November 2023
Keywords: welfare magnet hypothesis, accessibility of social assistance
JEL classification: H53, J15, J61, J68


The welfare magnet hypothesis, also referred to as welfare shopping or welfare tourism, that migrants make location choices based on the provision of welfare benefits in alternative destinations, has resonated in the academic as well as public discourse on migration. This chapter summarizes theoretical models behind the welfare magnet hypothesis and reviews the empirical evidence on welfare-induced migration. The literature is inconclusive on the matter. Whereas there are theoretical arguments why welfare might matter for migration flows and several studies find a small positive association between welfare and migration, other studies find no such effects. In particular, some studies show that controlling for the endogeneity of welfare in the welfare-migration nexus reduces or eliminates the effect of welfare generosity on immigration. On the other hand, recent quasi-experimental studies demonstrate some effects of welfare on the location choices of asylees and refugees. Exploring a unique European dataset, this chapter contributes to this literature by providing some evidence that better accessibility of social assistance for immigrants is associated with larger immigrant inflows. Overall, the consensus in the literature is that the effects of welfare on migration are relatively small compared to other drivers of migration. The chapter concludes with highlighting the broader implications of the welfare magnet hypothesis and provides guidance for future research about it.

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