Abstract
Abstract After the introduction of the freedom of movement for Eastern European workers, EU-15 countries were expected to reduce public benefits in order to avoid becoming “welfare magnets”. However, OECD data do not support the prediction of a race to the bottom in benefit levels. Using EU-LFS data, I analyze the determinants of migration flows and do not find evidence that welfare state variables affect migration flows when controlling for temporary political restrictions of the freedom of movement. This explains why the pressure to modify welfare spending is small. Furthermore, evidence is found that the restrictions offset the migration incentive effects of work-related pull factors.
Highlights
In December 2002, the European Council voted in favor of enlarging the EU by an additional 10 countries
Using EU Labour Force Survey (EU-LFS) data, I analyze the determinants of migration flows and do not find evidence that welfare state variables affect migration flows when controlling for temporary political restrictions of the freedom of movement
National governments were endowed with another strategic instrument for reducing the potential pressure from these migration incentives: the 2 + 3 + 2 rule which allows the closing of borders for migrants from the new member states by temporarily restricting the freedom of movement for workers
Summary
In December 2002, the European Council voted in favor of enlarging the EU by an additional 10 countries. The discussion of welfare state generosity as a pull factor goes back to the Roy model (Roy, 1951) that is applied to the case of migration decisions by Borjas (1994)5 Based on this theoretical model, Borjas (1999) develops the “welfare magnet” hypothesis. For example, in the common EU labor market with free movement for workers the benefit level should act as a pull factor, while this need not be the case for countries with a migration regime that restricts the entry or the access to welfare for migrants. While some studies emphasize the clustering effect through networks (Beine et al, 2011; Kaushal, 2005; Pedersen et al, 2008), other authors point out the importance of the welfare level (Borjas, 1999; Brücker et al, 2002; De Giorgi and Pellizzari, 2009) These studies only partially control for the differential effect of migration regimes that might reduce or completely eliminate the marginal effects of the push and pull factors. Migrant stocks are treated as black boxes so that incentives due to socio-economic characteristics are to be ignored in the analysis
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