Portability of Social Benefits: Research on a Critical Topic in Globalization

Abstract

The stock of migrants living outside their countries of origin may appear small, amounting to some 3% of the world population (United Nations Population Fund 2014). But this represents more than 200 million people, and this share has been (re-)increasing since the 1970s. The underlying flows are substantially higher and less is known about them. Therefore, a substantial number of individuals are spending at least part of their lives outside their own countries’ borders, mostly working but also in retirement. The potential for international mobility may be even higher, as migration is a highly regulated phenomenon, mainly governed by immigration laws in receiving countries that effectively prohibit migration in many directions and may discourage it in many other cases. Economic research on migration has a long tradition (see, for example, Tiebout 1956 as a predecessor, and Sjaastad 1962 and Harris and Todaro 1970 for fully fledged contributions), relying on the idea of rational decision making and a cost-benefit framework as powerful analytical tools. Wage and income differentials are seen as the main incentives to migrate, adjusted to migrants’ actual labor market prospects. Measures of geographical and cultural distance and the network of immigrants from the same home country living at a specific destination capture important determinants on the cost side. Far less is known with respect to the effects of institutional determinants, such as labor market institutions and particular features of social protection systems in receiving countries, on individuals’ decisions to migrate (see Geis et al. 2013 for preliminary evidence). There are indications that the existence and generosity of social protection systems have an impact on migration (see, for example, Pedersen et al. 2008; Mayda 2010), but measurement of activities of ‘the welfare state’ becomes rough whenever this research moves outside a narrow institutional setting at a subnational level (as in Borjas 1999). A field that is definitely underresearched is the role for mobility played by the portability of social benefits for which (potential) migrants have established vested rights in their current country of residence. Lack of portability creates problems mostly for individuals who