The Welfare Magnet Hypothesis: Evidence from an Immigrant Welfare Scheme in Denmark

32 Pages Posted: 18 Nov 2019 Last revised: 14 Apr 2021

See all articles by Ole Agersnap

Ole Agersnap

Princeton University

Amalie Sofie Jensen

University of Copenhagen, Department of Economics, Students

Henrik Kleven

Princeton University - Princeton School of Public and International Affairs

Date Written: November 2019

Abstract

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 The policy was later repealed and re-introduced.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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Suggested Citation

Agersnap, Ole and Jensen, Amalie Sofie and Kleven, Henrik, The Welfare Magnet Hypothesis: Evidence from an Immigrant Welfare Scheme in Denmark (November 2019). NBER Working Paper No. w26454, Available at SSRN: https://ssrn.com/abstract=3488954

Ole Agersnap (Contact Author)

Princeton University

Amalie Sofie Jensen

University of Copenhagen, Department of Economics, Students ( email )

KĂžbenhavn
Denmark

Henrik Kleven

Princeton University - Princeton School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

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