Welfare Migration in Europe and the Cost of a Harmonised Social Assistance

40 Pages Posted: 25 Apr 2006

See all articles by Giacomo De Giorgi

Giacomo De Giorgi

University College London; NBER; Federal Reserve Banks - Federal Reserve Bank of New York

Michele Pellizzari

University of Geneva - GSEM; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Date Written: April 2006

Abstract

The enlargement of the European Union has increased concerns about the role of generous welfare transfers in attracting migrants. This paper explores the issue of welfare migration across the 15 countries of the pre-enlargement Union and finds a significant but small effect of the generosity of welfare on migration decisions. This effect, however, is still large enough to distort the distribution of migration flows and, possibly, offset the potential benefits of migration as an inflow of mobile labour into countries with traditionally sedentary native workers. A possible way to eliminate these distortions is the harmonisation of welfare at the level of the Union. The second part of the paper estimates the costs and benefits of what could be a first step in this direction: the introduction of a uniform European minimum income. The results show that, for a realistic minimum income threshold, the new system would cost about three quarters of what is currently spent on housing and social assistance benefits. Despite its reasonable cost, the distribution of net donors and net receivers across countries is such that the actual implementation of this system would be politically problematic.

Keywords: EU enlargement, migration, welfare state

JEL Classification: J61

Suggested Citation

De Giorgi, Giacomo and Pellizzari, Michele, Welfare Migration in Europe and the Cost of a Harmonised Social Assistance (April 2006). IZA Discussion Paper No. 2094. Available at SSRN: https://ssrn.com/abstract=898599

Giacomo De Giorgi (Contact Author)

University College London ( email )

Gower Street
London
United Kingdom

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Michele Pellizzari

University of Geneva - GSEM ( email )

102 Bd Carl-Vogt
Genève, CH - 1205
Switzerland

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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