European Migration: Welfare Migration or Economic Migration?

Abstract

This paper presents an empirical assessment of bilateral migration flows into the EU-15 countries. Using an extended gravity model, it identifies economic, welfare state, geospatial and linguistic variables as the principal determinants of migration flows into the EU-15 countries. As long as its effect is not offset by a high unemployment rate in the host country, the level of social protection expenditure influences migrants' choice of destination. However, albeit acting as a joint force with other economic, cultural and geospatial variables, the welfare state characteristics of the host country need to be reckoned with when studying European migration flows. Our empirical findings lend some support for a more unified or at least better coordinated social policy across the European Union.

Determinants and dynamics of migration to OECD countries in a three-dimensional panel framework

“…Following Todaro (1969), Hatton defines expected income as the wage (w) times the employment rate (e), with income uncertainty being due to uncertain employment prospects. To take into account the welfare magnet theory presented in Borjas (1987Borjas ( , 1999, we extend this definition of expected income by adding the provision of public services (ps) in the form of social protection benefits 1 (see also Pedersen et al, 2008;Warin and Svaton, 2008). Assuming a logarithmic utility function and a binomial distribution to characterize the probability of employment, equation (1) can be rewritten as…”

“…Fertig, 2001;Boeri et al, 2002;Pedersen et al, 2008;Mayda, 2010), but this only partly removes problems of scale. Only dividing by the population in both sending and receiving countries or taking the natural logarithm entirely solves the problem (see Lewer and Van den Berg, 2008;Warin and Svaton, 2008;Ortega and Peri, 2009). …”

“…Bertocchi and Strozzi, 2008;Mayda, 2010) or the migrant stock (see e.g. Hooghe et al, 2008;Lewer and Van den Berg, 2008;Pedersen et al, 2008;Warin and Svaton, 2008), with both variables typically being argued to capture network effects 4 . Laber (1972) has already highlighted that it is not clear whether these dynamic terms represent network effects or rather capture a partial adjustment…”

“…Recent studies that estimate a three-way panel data model are Lewer and Van den Berg (2008), Pedersen et al (2008), Mayda (2010) for immigration to OECD countries or Gallardo-Sejas et al (2006), Hooghe et al (2008), Warin and Svaton (2008) for immigration to Europe. Second, none of the above mentioned studies (except Fertig, 2001) allow for the rich migration dynamics present in Hatton's (1995) model, i.e.…”

“…The standard fixed effects (FE) estimator, used by e.g. Hooghe et al (2008) and Warin and Svaton (2008), is severely biased and inconsistent for T fixed and N going to infinity (see e.g. Nickell, 1981).…”