Welfare Magnets, Taxation and the Location Decisions of Migrants to the EU

Klaus Nowotny

No 393, WIFO Working Papers from WIFO

Abstract: Migrants are among the groups most vulnerable to economic fluctuations. As predicted by the "welfare magnet" hypothesis, migrants can therefore be expected to – ceteris paribus – prefer countries with more generous welfare provisions to insure themselves against labour market risks. This paper analyses the role of the welfare magnet hypothesis for migrants to the EU 15 at the regional level. The empirical analysis based on a random parameters logit model shows that the regional location decisions of migrants are mostly governed by income opportunities, labour market conditions, ethnic networks and a common language. There is no strong evidence for the welfare magnet hypothesis in the EU, but the empirical model shows that the income tax system has a large and consistent effect on locational choice.

Keywords: migration; random parameters logit model; welfare magnet hypothesis (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-04
New Economics Papers: this item is included in nep-eec, nep-eur, nep-geo, nep-mig and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Welfare Magnets, Taxation and the Location Decisions of Migrants to the EU (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2011:i:393

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