Welfare Reform and Migrants’ Long-Term Labor Market Integration

Abstract

We study the effect of reducing welfare assistance on migrants’ long-term integration in Australia. The policy targeted primary carers of children and postponed their eligibility for benefits during their first two years in the country. It was announced after their arrival. Using a regression discontinuity design and 17 years of administrative welfare data, we find significant reductions in welfare receipt, which widened in the medium- and stabilized in the long-run. Benefit receipt amounts reduced by 28% and time-on-benefits reduced by 19%, particularly in the unemployment and disability categories. We observe larger treatment effects for mothers from disadvantaged backgrounds.

Keywords: Welfare reform, labor market outcomes, Migration, job quality