NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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The Welfare Magnet Hypothesis: Evidence From an Immigrant Welfare Scheme in Denmark

Ole Agersnap, Amalie Sofie Jensen, Henrik Kleven

NBER Working Paper No. 26454
Issued in November 2019, Revised in March 2020
NBER Program(s):Labor Studies, Public Economics

We study the effects of welfare generosity on international migration using reforms of immigrant welfare benefits in Denmark. The first reform, implemented in 2002, lowered benefits for non-EU immigrants by about 50%, with no changes for natives or EU immigrants. The policy was later repealed and re-introduced. Based on a quasi-experimental research design, we find sizeable effects: the benefit reduction reduced the net flow of immigrants by about 5,000 people per year, and the subsequent repeal of the policy reversed the effect almost exactly. The implied elasticity of migration with respect to benefits equals 1.3. This represents some of the first causal evidence on the welfare magnet hypothesis.

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Document Object Identifier (DOI): 10.3386/w26454

 
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