Nine - Benefit tourism and EU migrant citizens: real-world experiences

Summary

Introduction

According to the ‘welfare magnet theory’, generous welfare states are said to be negatively affected by immigration, as migrants may be attracted by high welfare benefits or services. In a nutshell: the higher the benefits are, ceteris paribus, the higher the number of (unskilled) immigrants entering the country (Borjas, 1999). In fact the dominant interpretative pattern within the political discourse leading up to the Brexit referendum was that European Union (EU) migrant citizens were attracted to the UK by its relatively generous welfare benefits and services. Prime Minister David Cameron in 2014 claimed:

‘Someone coming to the UK from elsewhere in Europe, who's employed on the medium wage and who has 2 children back in their home country, they today will receive around £700 per month in benefits in the UK. That is more than twice what they’d receive in Germany, and 3 times more than they would receive in France. No wonder so many people want to come to Britain.’ (Cameron, 2014)

However, empirical evidence on the impact of welfare state generosity on migration flows within the EU is rather mixed. De Giorgi and Pellizzari (2009) find weak evidence for welfare magnets, while others reject the magnet hypothesis and argue that labour market opportunities and networks largely determine migration flows (Giulietti and Wahba 2012; Zimmermann et al, 2012; Giulietti et al, 2013; Skupnik 2014). The suggestion that EU migrant citizens will create a smaller net benefit (or larger net cost) in countries with tax-financed benefits, such as the UK, than in countries with predominantly insurance-based welfare states (Ruhs 2015) is also far from clear, as the financing structure is not necessarily a robust indicator for the ease of access and the level of social rights available to EU migrant citizens (Bruzelius et al, 2016). Benefits important to working-age EU migrant citizens, such as Child Benefit, Housing Allowance and in-work benefits, are largely tax financed independently of the overall financing structure of the welfare state. Research by Dustmann and Frattini (2014) found that the migration of EU citizens to the UK provides a clear economic benefit, as the average fiscal contribution of EU migrant citizens is higher than among British nationals.