Immigration and the welfare state

William L Allen, Mariña Fernández-Reino and Isabel Ruiz

Oxford Review of Economic Policy, 2025, vol. 41, issue 1, 64-86

Abstract: As immigration continues to be politically salient in North America and Europe, questions about the compatibility of modern welfare states with immigration inflows remain central to public and policy debates. This article examines the empirical evidence surrounding three key questions: first, whether generous welfare systems attract immigrants disproportionately (the ‘welfare magnet hypothesis’); second, the extent to which immigrants’ net fiscal contributions are positive, negative, or neutral; and third, how public attitudes toward immigration intersect with concerns about the welfare state. Our analysis indicates that while evidence supporting the welfare magnet hypothesis exists in some contexts, its applicability depends on factors such as migrant characteristics and policy environments. Similarly, fiscal contributions vary: high-skilled immigrants generally contribute positively, while low-skilled migrants and those entering on humanitarian grounds can present short-term fiscal challenges, though these are usually mitigated by integration policies over time. However, while public attitudes and perceptions often diverge from these nuanced realities, they do not entirely correspond with perceptions of existing welfare systems as magnets for migrants or of migrants’ fiscal impacts as being overwhelmingly negative. Instead, public concerns about immigration and welfare often reflect broader socio-economic and cultural anxieties that can shape politics and policy-making despite not aligning with best-available evidence. Therefore, researchers should prioritize finding ways of bridging gaps between empirical findings and public perceptions to inform effective and balanced policies. This could be achieved, in part, by fostering more informed public discussion that acknowledges underlying anxieties, as well as implementing policies that reconcile economic sustainability with social cohesion.

Keywords: immigration; immigration policy; fiscal impacts; welfare state; redistribution; public opinion (search for similar items in EconPapers)
Date: 2025
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