Pitfalls of immigrant inclusion into the European welfare state

Citation

Barrett, A., Kahanec, M. and Zimmermann, K.F. (2013), "Pitfalls of immigrant inclusion into the European welfare state", International Journal of Manpower, Vol. 34 No. 1. https://doi.org/10.1108/ijm.2013.01634aaa.001

Pitfalls of immigrant inclusion into the European welfare state

Article Type: Guest editorial From: International Journal of Manpower, Volume 34, Issue 1.

About the Guest Editors

Alan BarrettResearch Professor at the Economic and Social Research Institute, Dublin, and also at Trinity College Dublin, where he is Project Director with The Irish Longitudinal Study on Ageing (TILDA). He is a Research Fellow with IZA, Bonn. He is also a member of the Irish Fiscal Advisory Council. His research focuses on migration and population ageing.

Martin KahanecAssociate Professor at the Central European University in Budapest. He is a Senior Research Associate, Deputy Program Director of Migration, the leader of program sub-area EU Enlargement and the Labor Markets and a former Deputy Director of Research at IZA, Bonn, as well as Scientific Director of CELSI, Bratislava. His main research interests are labour and population economics, ethnicity and migration, and reforms in Central and Eastern European labour markets. His publications on these topics include articles in refereed journals, book chapters, as well as edited volumes and journal special issues. He has held several advisory positions and coordinated or participated in a number of scientific and policy projects. Martin Kahanec is the corresponding author and can be contacted at: KahanecM@ceu.hu

Klaus F. Zimmermann Professor of Economics at Bonn University, Director of IZA Bonn, Honorary Professor of Economics at the Free University of Berlin, and Honorary Professor at the Renmin University of China, in Beijing. His current research interests are in migration, labour economics and population economics, with a particular focus on ethnicity and identity. He is a member of the German Academy of Sciences Leopoldina and of Academia Europaea, has advised many national governments and the EU commission, and is the author or editor of 45 books and 120 papers in refereed research journals and 130 chapters in collected volumes.

Immigration is among the most controversial of economic, political and social issues. This is especially true with regard to the issue of social assistance and welfare receipt by immigrants. There appears to be a commonly held view that immigrants in Europe are disproportionately represented amongst social assistance recipients. It is similarly believed that generous European welfare systems attract immigrants who then are more likely to become reliant on welfare. As is often the case with “commonly held views”, the evidence base was relatively thin. Empirical studies had been undertaken in a limited number of European countries but not in many others. In addition, with the exceptions of Boeri (2010) and Boeri et al. (2002), there have been almost no pan-European studies of welfare receipt by immigrants. A fresh survey of the welfare migration literature can be found in Giulietti and Wahba (2013).

The central purpose of this special issue is to deepen our knowledge with regard to immigrants and welfare receipt across Europe. Among the core questions are whether or not immigrants are over-represented among welfare recipients and whether European welfare regimes act as “welfare magnet”.

The special issue begins with three papers which take a pan-European perspective. Using data from the European Union Survey on Income and Living Conditions for 2007, Barrett and Maître examine relative rates of poverty for immigrants and natives across European countries. They find very little evidence that immigrants are more likely to receive welfare payments when all payments are considered together. This is true whether they use descriptive analysis or regression analysis in which we control for relevant characteristics such as age, gender and education; in fact, in the latter case immigrants generally appear to be not more and often less likely to be in welfare receipt than natives.

Giulietti, Guzi, Kahanec and Zimmermann tackle the “magnet” question and explore whether and how changes in countries’ unemployment benefit spending (UBS) affect immigration. They collected data for 19 European countries over the period 1993-2008. While their OLS estimates suggest the existence of a moderate welfare magnet effect for the inflows of non-EU immigrants, more sophisticated econometric techniques disentangling causal links between welfare and migration reveal impacts that are substantially smaller and statistically insignificant.

In their paper, Kahanec, Kim and Zimmermann adopt a very different perspective. Using an online survey of experts from NGOs and public organisations working on immigrant integration in the Member States of the European Union, they set out to evaluate immigrants’ demand for social assistance and services. They also seek to identify the key barriers to social and labour market inclusion of immigrants in the European Union. They find that the general public in Europe has rather negative attitudes towards immigrants. Although the business community views immigrants somewhat less negatively, barriers to immigrant labour market inclusion identified include language and human capital gaps, a lack of recognition of foreign qualifications and discrimination. Exclusion from higher education, housing and the services of the financial sector are found to aggravate these barriers.

Following this pan-European perspective, the papers then turn to look at country-specific issues beginning with the traditional immigrant-receiving countries.

Riphahn, Sander and Wunder explore the relative use of welfare by Turkish immigrants and natives in Germany. They use data from the German Socio-Economic Panel Study to investigate the correlates of transfer receipt for the two subsamples and find that immigrants of Turkish origin have a higher propensity to receive welfare benefits than natives. After controlling for individual and household level characteristics, the difference in welfare receipt is statistically significant only for the group of second generation immigrants.

Zorlu examines interethnic differences in the degree of participation in social assistance, disability and unemployment benefits in the Netherlands. The analysis shows that migrants from non-western countries, both first and second generation, have a higher probability of participation in social assistance and disability-benefit programmes and to a lesser extent in unemployment-benefit programmes. A large part of migrants’ welfare dependence can be explained by their socio-economic characteristics and immigration history, but a significant unexplained residual is still left.

For the UK, Drinkwater and Robinson present an analysis which focuses on the types of benefits that immigrants tend to claim as well as examining differences by area of origin. They also examine the factors that determine social assistance benefit claims, including an investigation of the impact of education, ethnicity and years since migration. They find that social welfare claims vary considerably by immigrant group as well as by the type of benefit claimed in the UK. There are also differences by immigrant group in the factors determining social assistance claims. Hence, they conclude that it is very difficult to generalise on the issue of welfare participation by immigrants in the UK.

The paper which looks at the situation in France takes a different focus, with social housing as opposed to social payments being examined. Fougère, Kramarz, Rathelot and Safi examine the links between social housing policy and location choices of immigrants in France. They find that, in general, migrants are more likely to live in social housing than French natives, controlling for a range of socioeconomic factors. In particular, this tendency is higher for migrants from Turkey, Morocco, Southeast Asia, Algeria, Tunisia and Sub-Saharan Africa (in decreasing order).

Given the particular qualities of their welfare systems, studies from two Scandinavian countries are also included in this volume. Pedersen summarises the existing evidence on welfare dependence among immigrants in Denmark and supplies new evidence for the most recent years, with a focus on immigrants from non-western countries. As regards relative rates of welfare use by immigrants, the existing studies echo findings from elsewhere. They show the importance for welfare dependence of the socioeconomic characteristics of immigrants and cyclical factors at the time of their arrival and during their early years in Denmark. On the question of the migratory incentives created by welfare, the evidence reinforces the importance of macroeconomic factors such as the rate of unemployment in contrast to the small effects found from policy changes intending to influence the economic incentives between welfare and a job for immigrants.

Gustafsson looks at the situation in Sweden and provides an overview of the issue of social assistance receipt among immigrants in Sweden, compared to natives. He reports that immigrants tend to assimilate out of social assistance receipt. However, social assistance receipt continues to be higher many years after immigration among immigrants from non-rich countries than for natives with similar characteristics.

As migration into a new set of countries increased in the last decade, it was important to look at these countries also. For Ireland, Barrett, Joyce and Maître compare the rates of receipt of welfare for immigrants and natives. Their analysis generally shows that in the years preceding the recession that began in 2008, immigrants were less likely to be in receipt of welfare payments, whether they look at adjusted or unadjusted data. The recession, and the consequent job losses among immigrants, gave rise to a possible surge in the numbers of immigrants receiving welfare benefits. While this seemed to happen at the outset of the recession, the more recent trends in the numbers receiving payments would suggest that the numbers of non-nationals stabilised, even as the number of nationals claiming payments continued to rise.

Pellizzari analyses the issue of welfare use by migrants in Italy. He is able to overcome the data limitations that arose in earlier research by using an original administrative archive of means tests which were undertaken to establish both individuals’ and households’ eligibility for all kinds of benefits, both in cash and in kind. Results show that, without controlling for observable characteristics, migrants from outside the EU are more likely to apply for welfare. Once individual and household characteristics are controlled for, such a residual welfare dependency is greatly reduced but does not disappear.

Rodríguez-Planas analyses differences in welfare benefits receipt between immigrants and natives in Spain. Using data from 1999 to 2009 Labour Force Surveys, her results show higher rates of receipt among immigrants. This is mainly driven by recently arrived immigrants whose legal status or insufficient contributions are likely to hamper participation in social programmes. She also finds that immigrants with more than five years in the host country are more likely to receive unemployment benefits than natives. These findings hold regardless of immigrants’ continent of origin.

While many of the studies (although not all) point to higher rates of receipt of social assistance among immigrants, any differences are reduced or eliminated once the characteristics of immigrants are taken into account. Hence, evidence for the existence of a specific “immigrant” effect on social assistance receipt could be described as limited. Neither do we see much evidence for the magnet effect of welfare regimes. These results suggest that the commonly held views discussed above may not hold. If anything, welfare regimes may be failing immigrants in terms of supporting incomes and facilitating integration. From the policy perspective, these results underscore the importance of migration policy as an important tool conditioning the characteristics of immigrant flows and thus their adjustment prospects. These are complex issues but the papers gathered in this volume provide important new results enriching the academic debate and with the potential to steer the policy discourse in more fruitful directions.

Alan Barrett, Martin Kahanec and Klaus F. ZimmermannGuest Editors