Does Migration Threaten the Sustainability of European Welfare States?

WWWforEurope Working Papers series 21

135 Pages Posted: 28 Jan 2014

See all articles by Peter Huber

Peter Huber

Austrian Institute of Economic Research (WIFO); Mendel University in Brno

Doris Oberdabernig

Austrian Institute of Economic Research (WIFO)

Date Written: September 2, 2013

Abstract

We investigate the relative contributions of migrant and native households to welfare states. Using two step Oaxaca-Blinder decompositions that control for selection into benefit take-up, we are able to identify the individual variables contributing to differences in welfare receipt by native and migrant households. We find that most of the differences are explained by observable characteristics such as size of the household as well as age and education of its head and income in some countries. In contrast, significantly lower net contributions of migrant households to the state budget persist in many countries even after controlling for observable factors. The reasons for this are primarily lower tax payments of migrant households. Selective migration and sound integration policies and as well as policies avoiding marginalization of migrants in informal labor markets are therefore the most effective means to avoid fiscal burdens of migration.

Keywords: Oaxaca-Blinder decomposition, EU-countries, migration, net contributions

JEL Classification: J61, J15, H53, I38

Suggested Citation

Huber, Peter and Oberdabernig, Doris, Does Migration Threaten the Sustainability of European Welfare States? (September 2, 2013). WWWforEurope Working Papers series 21, Available at SSRN: https://ssrn.com/abstract=2385897

Peter Huber (Contact Author)

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Mendel University in Brno ( email )

Zemedelska 1
Brno, South Moravia 61200
Czech Republic

Doris Oberdabernig

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

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