Appunti esame migration in Europe mod.2 prof. Venturini

Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Migration in Europe mod.2

Prof. A. Venturini

23 Marzo

Lezione 7 – Immigrants and Welfare

The effect of immigrants on the welfare state

Political issues:

Even if in the long run migrants finance the pay as you go pension system, migrants may be very costly for the destination economy because they use the welfare state more than natives or similar natives.

If this is so, natives finance the welfare services received by the foreigners through the general fiscal system. This creates distributive conflicts, reducing the total migration surplus.

Policies to implement

• Restrict welfare eligibility.
• Revise immigration policies, choosing characteristics (in general skills) to reduce the welfare cost of immigrants.
• Implement policies which favour the assimilation out of welfare of foreigners, i.e. policies which encourage the non-take up of benefits by eligible migrants.
• Implement policies to prevent immigrants from entering the welfare state and avoid state dependency.

The model of geographic sorting of immigrants

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Factors influencing the net fiscal position of immigrants

An optimistic case

Tax-Consumption profiles by age and birth status

A pessimistic case

Tax-Consumption profiles by age birth status – 1.

Welfare magnet

• Migrants attracted by the higher welfare.
• Migrants unable to secure employment are less likely to out migrate.
• Migrants settlement follows welfare generosity and induce more welfare burden in the more generous regions.

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Borjas 1999

• Regions with different welfare generosity and return to skill.
• Natives have fixed cost of migration.
• Foreigners do not have.

Prediction change in benefits level, higher welfare participation among the migrants.

• 37.6% of the migrants welfare recipients were in California.
• 27.6% of migrants employed in California.
• California is a high welfare state.
• Differential with native very limited.

Enchautegui 1999

• Women has moved to more generous welfare states.
• Effect small.

Lavine Zimmermann 1999

Women with small children

Giulietti (2011)

• Endogeneity.
• Affect unemployment spending size and GDP.
• Change in policy.

Razin Wahba (2011) selection

Welfare generosity affect the magnet.

The generosity of welfare state was supposed to be a in the localization of the foreigners. While BORJAS (1999) for the USA and Bruecker et al. (2002), using the Euro Panel (2001-04), do not find any evidence, De Giorgi and Pelizzari (2006), again using the Euro Panel, find a propensity to settle where the welfare state is more generous. However the wage effect plays a much larger role in attracting migrants, ten times larger than the benefit impact.

In receipt of Welfare payment

Borjas Trejo 1991

• More eligible.
• Assimilation into welfare state.

Kaestner and Kausal 2005

• Effect of a reform reduce eligibility.
• Reduction of the use of welfare but not less take up benefits only reduced eligibility.

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

• Take up benefits conditional on eligibility remained high.

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

2. On aggregate migrants are making more use of the welfare system

• In Germany, Flick (1999) find that migrants are 3.7% more likely than natives to be in receipt of benefits.
• In Sweden, Hansen and Lofstorm (2003) reported that in the mid-1990s the expenditure on social assistance for immigrants in Sweden equaled that for natives, but the migrants were only 10% of the total population.
• Also, in the UK, Barret and McCarthy (2008) show that 19% of immigrants, but only 12% of natives, receive welfare payments.

3. Conditional to the migrants’ characteristics, do they use the welfare more than the natives?

Sweden

In Europe, is very interesting because its welfare system is the most generous.

Hansen and Lofstrom (2003, 2006, forthcoming) and Andrén (2007), using administrative longitudinal data, find that migrants use welfare more intensively than natives, but as natives immigrants assimilate out of welfare – i.e. the longer they stay in the welfare system and in the destination country the less they use welfare benefits – even if at a lower pace than natives.

Germany

In Castronovo et al. (2001) find that migrants, given their income and household structure, are more likely to be eligible for welfare benefits, but even if they are more likely to be eligible, they do not take up welfare benefits more than similar natives. Thus, immigrants’ characteristics explain their relatively intense use of welfare, as also Riphan (2004) point out in her analyses, where she also find that in the Swedish case dropping out of the labour market is a much stronger predictor of welfare receipt among immigrants relative to natives.

Bruecker at al (2002)

• Probability of employment.
• Self-selection.
• Migration specific effect language.
• Discrimination.
• Network effect.
• Excluded by legislation portability of benefit, no in public job.

G, UK, Sp, Greece similar DK, NL, Fr, Au, Fin higher in the first group of countries no residual effect.

4. Are migrants more present in the form of contributory benefits or in the form of non-contributory benefits to the welfare state?

The Fondazione Rodolfo DeBenedetti proposes in its study for “Labour Mobility within the EU in the context of enlargement and the functioning of the transitional arrangements” by the European Integration Consortium a distinction between contributory benefits and non-contributory benefits.

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

The former is designed to cover against the risk of unemployment, longevity (pension), sickness, disability and survivor’s pension.

The latter are household-related and include housing and family allowances as well as transfers targeted specifically on groups with higher risks of social exclusion.

The dataset used is the European Survey on Income and Living Conditions (EU-SILC) between 2004-06.

Percentage of immigrants across countries

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Ratio of proportions of immigrants and natives: all types of support

Ratio of proportions of immigrants and natives: Old-age support

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Ratio of proportions of immigrants and natives: sickness/disability support

Ratio of proportions of immigrants and natives: Family/child support

Ratio of proportions of immigrants and natives at risk of poverty

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Ratios of average ages of immigrants and natives

Ratios of proportions of immigrants and natives with post-secondary and tertiary educations

Ratios of average number of children

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Estimated marginal impact of immigrant status on support receipt: all types of support

Estimated marginal impact of immigrants’ status on support receipt: unemployment, sickness and disability

Estimated marginal impact of immigrant status on support receipt: Old age

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Estimated marginal impact of immigrant status on support receipt: family/child support

Estimated marginal impact of immigrant status on support receipt: a risk of poverty

5. Balance between costs and taxes

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Straubhaar and Weber (1994) try to estimate the impact of foreigners on the Swiss fiscal system using a special survey on consumption conducted in 1990. They can include, on the income side, payments to the public budget in the form of direct and indirect taxes and social payments, and the contributions for the use of public goods and of club goods (that is to say, education, public health, protection of the environment, etc.) and, on the expenditure side, direct transfers to firms and the use of public goods and club goods.

The budget turns out to be a largely positive for the Swiss government, which received a net transfer for the $1743 in the year examined.

Given the number of foreign resident families, there is a net gain of about $464 million for the Swiss Government.

Conclusion

The issue is much more addressed in the political debate, probably because the choice of more selective immigration policies or selective eligibility policies are easier to discuss.

This approach, however, relies on the idea that migration is a permanent phenomenon, whereas in the recent years many studies have pointed out the importance of returns, and their frequencies.

If the European union pursues the policy of circular migration, the theoretical and empirical debate will have to be revised.

Trends in Migration Policies - Immigration policy indexes

Convergence in immigration policies?

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Citizen of a member state when the country enter the EU face a transition period in which the free mobility does not apply. The transition period lasted 6 years for IT, Sp, Greece and Portugal after which they could freely move around EU and the internal frontier controls could be eliminated.

Transitional regulations in the EU-15

5 Aprile

Intervento esterno - Sona Kalataryan (EUDAL) - International Migration Datasets: How to use different source for different questions

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

What are we going to cover?

• How many they are?
• Where do they come from?
• Which are the consequences of “blissful ignorance”?
• Reliable.

Why do we care about having migration statistics?

• Where does the data come from?
• What does the available statistical information tell us about international migration?

How many they are?

Out of 100 how many do you think are immigrants to this country

The presence of people from other ethnic groups increases unemployment in our country

Share of respondents considering that the presence of people from other ethnic groups increases unemployment.

Attitude towards foreign immigration

The regression analysis shows that the negative attitude and its dynamics are associated with the unemployment positively and statistically significantly rate when the share of the foreign-born population is taken into account. Put in other terms, the higher the unemployment the higher the share of respondents who consider that “immigrants take jobs away”. These results suggest that the stereotype might be shaped by the difficult socioeconomic situation rather than by immigration itself.

The percentage of the foreign citizens (split between EU and non-EU nationals)

Luxembourg: 43.8% (37.9% EU and 5.9% non-EU)

Lichtenstein: (non-EU) 33.3% (16.7% EU and 16.7% non-EU)

Reading and reflecting

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

(?) Luxembourg is the most generous country overall with over 40% of its population being foreign citizens, although mostly from the EU.

(?) Lichtenstein and Switzerland, while not EU members themselves, are also both very generous to EU citizens.

(?) Estonia and Latvia are interesting as while they’re not yet especially rich, they still host a large number of non-EU nationals. (!) The explanation is many ethnic Russians living in both countries at the time of independence have chosen not to become citizens. Lithuania does not have this issue, because when it became independent it had far fewer ethnic Russians living its borders and so made them all citizens.

Does EU take in enough migrants?

Flow of foreigners as a percentage of population

What about the rest of the world?

Flow of foreigners as a percentage of population

Challenges

• Legal vs illegal migration.
• Stocks vs flows.
• Country of birth vs Citizenship.

(On 1 January 2014, the number of people living in the EU-28 who were citizens of non-member countries was 19.6 million while the number of people living in the EU-28 who had been born outside of the EU was 33.5 million)

• Data sources (Census, Administrative data, Surveys).
• Emigration vs. Immigration.

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

(Emigration is particularly difficult to measure; it is harder to count people leaving a country than those arriving. An analysis comparing 2013 immigration and emigration data from the EU Member States (mirror statistics) confirmed that this was true in many countries)

Harmonization/comparability

Example: National Immigration Statistics show for 2013: Germany: 1.108.000 (ONLY 27.000 new immigration visa for labour) Canada: 258.000 (of which 148.000 (57%) in the «economic class»)

=> OECD-concept of “permanent-type migration” by category

Definitions

In-migrant—A person who moves in a political area within the same country

Immigrant—An international migrant who enters the area from a place outside the country

Out-migrant migrant—A person who moves out of a political area within the same country

Emigrant—An international migrant departing to another country by crossing the international boundary

What can international migration statistics tell us about migrants?

• Place of birth.
• Nation of origin/ Nationality(ies).
• Place of residence at some specified earlier date.
• Destination.
• Duration at current residence.
• Age.
• Sex.
• Education.
• Labour market status.

What does the information come from?

Administrative data

• Municipality.
• bMinistry of internal affairs Fiscal registers (account only legally residing population) Surveys Sample Surveys (mostly Ad-hoc, cross-section) Census (approximately every 5-10 years) Labour Force Survey.

(Census vs. Survey) You cannot have it all!

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

12 Aprile

The effect on the labour market

Migration always has been an hot topic and migration policy is always under revision.

One of the key argument used in the debate is the positive or negative role played by foreigners in the labour market of destination country and according to their effect migration policy and related policies are changed.

The debate on this theme is characterized by conflicting and emotional stances.

Supporters of competition argue as if there were a given number of jobs in an assumed economy and they that the foreigners cannot set off any growth in demand. Assume

The supporters of complementarity, instead, that there is a clear segmentation between foreigners and natives, thus no competition can arise.

The impact of immigration can also be affected by changes in the business cycle; by periods of excess demand or excess supply and the contrasting effects of reduced wage growth but also of reduced inflation, which could be beneficial to the natives, too.

The passionate discussion about hypothetical reactions of the labour market can go on for ever but economic theory is unequivocal on this point.

Types of migration

• Labour migration, family reunion, political refugee.
• Temporary versus permanent migration duration of the temporary migration, contracted migration.
• Skilled versus unskilled selection of the supply, selection of the demand and policy selectivity.

1. The effect of immigration at the aggregate economic level

Political issue

This is the main political issue but the answer to this question need to know the effect of immigration in all the following area and even more.

Policies to implement

Selective immigration policies and specific policies to contrast the negative effects of immigration. Less empirical research.

This is the field where has been conducted. There is a large body of empirical evidence that immigration increases the aggregate GNP in destination country; but this is not enough to draw a positive conclusion.

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Migration in Europe mod.2 – A. Venturini a.a 2017/2018

Foreign labour can act as an engine for economic growth.

The idea that is based on studies carried out in the 1950s and 1960s. Lewis, Kindelberger, population and growth Lutz were there was a positive link between and the rate of accumulation and technological progress.

The case of Switzerland, a country that has always exercised strict control over immigration, reveals that the output elasticity of labour is lower for foreigners (0.10) than for natives (0.46) (Butare, Favarger 1995), which means that foreigners have a positive impact on the growth of income but not on per-capita income.

Migrants provide flexibility in very rigid labour markets.

The conclusions reached in the literature (Dolado, Ichino, Goria 1994) agree in identifying a positive effect for the growth of per-capita income in the receiving country, if the foreigner’s human capital is higher than that of the native, and vice versa if it is lower.

The debate is often based on sociopolitical arguments which are difficult to test: as, for example, in the case of Simon (1989) who argues that one of the many positive aspects of scattered migration is the positive impact that a multiethnic society has on technological innovation.

Income distribution negative effects.

2. The Effect of immigrants on the destination labour market

Political issues:

• Immigrants should not damage native workers by reducing their wages or/and replacing natives in their jobs.
• This result will create conflict increasing the burden of unemployment on the welfare state and it is not economically and socially feasible.

Policies to implement:

The migration policy should be selective in order to reduc