Unemployment Benefits, Risk Aversion, and Migration Incentives

Arbeitspapier

With reference to the EU enlargement, a framework is derived which allows the study of the effect of unemployment benefits on the migration decision. While benefits simply increase the expected gain for risk neutral individuals, they work as an insurance device for risk averse migrants; the results for the two groups might differ. Thus, the migration decision is reformulated as monetary lottery and a utility function exhibiting constant relative risk aversion is applied. The model suggests increased migration incentives independent of taste and a positive selection of risk neutral individuals. Furthermore, risk averse migrants are likely to be found in countries with more evenly distributed incomes, other things equal. While the calibration of the model shows a significant change in migration incentives, empirical results on aggregate data for South-North migration within the EU are rather ambiguous.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 610

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Unemployment Insurance; Severance Pay; Plant Closings ; Geographic Labor Mobility; Immigrant Workers ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General
• Subject: migration ; welfare benefits ; risk aversion ; fixed effects ; Migrationstheorie ; Arbeitslosenversicherung ; Risikoaversion ; Internationale Wanderung ; Schätzung ; Theorie ; EU-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heitmüller, Axel
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/21276
• Last update: 10.03.2025, 11:43 AM CET