UCL Uncovering Politics

Do Higher Benefits Encourage Immigration?

Episode Summary

This week we ask: Do higher welfare benefits lead to higher immigration?

Episode Notes

Immigration is back near the top of the political agenda, here in the UK and elsewhere. The UK government’s so-called ‘Stop the Boats Bill’, which targets those who cross the Channel in search of asylum, is one rather extreme manifestation of the idea that you can stop unwanted migration by making it unattractive. A wider expression of the same view is the concept of ‘benefit tourism’: the idea that migrants are more likely to come if welfare benefits are higher, and that and that you can therefore reduce immigration be keeping benefits low.

Now, there are clearly questions to ask about whether such ideas are morally defensible, but it’s also important to ask whether they work on their own terms. And new research carried out here at UCL casts important doubt on that. We are joined by one of the co-authors of that research, Dr Moritz Marbach, Associate Professor in Data Science & Public Policy in the UCL Department of Political Science.


Mentioned in this episode:

Episode Transcription


immigrants, switzerland, benefits, welfare, municipalities, migration, ucl, behaviour, immigration, data, move, levels, amount, welfare state, effects, idea, swiss francs, country, uk, charles


Alan Renwick, Moritz Marbach


Alan Renwick  00:06

Hello. This is UCL Uncovering Politics. And this week we ask: do higher welfare benefits lead to higher immigration?


Hello, my name is Alan Renwick. And welcome to UCL Uncovering Politics, the podcast of the School of Public Policy and Department of Political Science at University College London. 


Immigration is back near the top of the political agenda here in the UK and elsewhere. The UK government's so-called 'Stop the Boats Bill', which targets those who cross the Channel in search of asylum, is one rather extreme manifestation of the idea that you can stop unwanted migration by making it unattractive. A wider expression of the same view is the concept of 'benefits tourism', the idea that migrants are more likely to come if welfare benefits are higher, and that you can therefore reduce immigration by keeping benefits low. 


Now, there are clearly big questions to ask about whether such ideas are morally defensible, but it's also important to ask whether they even work on their own terms. And new research carried out here at UCL casts important doubt on that. 


One co-author of that research is Dr Moritz Marbach, who is Associate Professor in Data Science and Public Policy in the UCL Department of Political Science. And I'm delighted that Moritz joins me now.


Moritz, welcome to UCL Uncovering Politics. And let's make sure at the start that we're clear on just what we're talking about here. So throughout the article you refer to the concept of the 'welfare magnet hypothesis'. Could you explain just what that is?


Moritz Marbach  01:54

Sure. Thanks for having me, Alan. 


So the welfare magnet hypothesis is sort of this old idea that, you know, like you basically already described a little bit in that immigrants go where they get the most benefits. That idea comes from sort of the '50s from a paper by Charles Tiebout that was really not about immigration at all – like not about international immigration – but more about in general, like, how people choose their place of residence. So this paper, like, he asked basically to what extent and how people make this trade-off between, on the one hand, getting a lot of public goods and public services, and then paying also the taxes to pay for these types of goods. And so one of the key ideas that comes out of this paper is that sort of, like, people will vote with their feet and they will go where they get sort of the best ratio, or the sort of the best trade-off, depending on their preference, between like how many public goods, how many public services, but then also like the level of taxes that they are comfortable paying. 


And so scholars of migration in particular, like economists like George Borjas, they sort of took this idea and argue that when immigrants arrive in a new place, they tend to be very, almost by definition, less rooted, right – like, they have few social networks, they have few like networks into the labour market. And because of that, their sort of relocation costs tend to be relatively low as compared to those that are more rooted in a place. And because of that we might expect that immigrants are more engaged in this type of like behaviour optimising – finding, sort of, the best place to get the public goods, the public services. 


And that, you know, like comes in with sort of this idea that after arrival immigrants tend to be economically relatively vulnerable. And also, because of that, tend to be more needy in terms of the amount of, like, welfare assistance they need. So this idea is, you know, like fairly, as I already said, like fairly old in the literature. 


But like, the empirical evidence for this hypothesis has been rather mixed. So in many of these studies... In many studies, like, we observe a correlation between the concentration of immigrants and the generosity of the welfare state locally. Many of these studies, they look at the United States, and they observe that like immigrants tend to go to California, which happens to be a state that is relative, in comparison to other states, relatively generous in terms of like the welfare that you can receive. But of course, like, you know, then California is also very prosperous economically – there are many economic opportunities, especially for immigrants. And so it's really hard to sort of conclude or to delineate: do immigrants go there because of the generosity of the welfare state or is it because that they go there in search for economic opportunities? And so the literature is relatively mixed in terms of the evidence whether or not like immigrants engage in particular in this type of behaviour that Charles Tiebout describes. And much of it has really to do with sort of a lack of data.


Alan Renwick  05:09

And before we get into the data that you introduce into this, just to clarify the theory in my own mind. So you started off there with the work of Charles Tiebout back in the 1950s which, as you said, was very broad work, not focused just on immigration-


Moritz Marbach  05:22



Alan Renwick  05:22

-And also not focused just on benefits. So the idea there was that people are looking at all of the various public services that are available and at taxes. So I mean it's intriguing that the literature on immigration seems to focus very particularly on levels of benefits rather than all of the other stuff. Is that just because there's an idea that somehow immigrants are particularly affected by benefits levels and all of the other stuff is a bit less important? And why does that shift happen?


Moritz Marbach  05:47

Yeah, so that's interesting. So like you're absolutely right in your observation that sort of like Charles Tiebout's ideas were much broader, and they cover like all types of like public goods and public services. But then sort of what scholars of migration – and international migration in particular – sort of like took from that is sort of that very much this focus on the welfare state and sort of like welfare payments. And I don't know how that happened in particular – why this sort of, like, focus on this particular type. But I think, you know, like much of it might also be like just data availability, because measuring sort of like public good provisions locally and public service provision locally is often relatively hard, and one of the things that we to some degree may have is the amount of money spent on welfare. I think that's sort of like where sort of I can see why this might have happened in the literature. But like it's definitely a gap, like I think. You know, like there's very little research on other types of public good and to what extent they are important in the in the immigration calculus.


Alan Renwick  06:52

There's always more research to be done. 


So let's focus in on the paper that you've done. And here you focus on the case of Switzerland. And I guess you're doing that partly because Switzerland does help you overcome some of these data availability issues – there's just a tonne of really good data that you can use in Switzerland. Is that fair?


Moritz Marbach  07:12

Yeah, that's absolutely true. That's one of the big motivations. So like, in the case of Switzerland, we have access to administrative data collected by the government to administer the social benefits system. We have data that basically covers everyone. So we know like how much you receive – if you're on welfare in Switzerland, we know how much you receive, your demographics and all of that. So like we know a lot about like those receiving welfare in Switzerland. 


And then we studied the period of 2005 to 2015 because this is sort of like where the data has been made available by the Swiss government. And so like data availability is certainly like one important part of the motivation in particular because much of – and that's what I already alluded to earlier – much of the literature really only has aggregate data. And so like one of the key innovations of this paper is that we have individual-level panel data. So we observe people over a 10-year period, not only in terms of like what types of benefits they receive and how much in particular, but also like how they move across Switzerland, which is obviously important to answer this question about whether or not there is this kind of benefit tourism that you described earlier. 


And so the second motivation is that we believe that Switzerland is actually a good case to look into this. In many ways we think of Switzerland as the most-likely case to observe the type of behaviour that the welfare magnet hypothesis stipulates. And one reason... Or like there are basically three reasons. 


The first reason is that Switzerland is relatively small, meaning that like there's short distances, and so relocation costs are comparably speaking should be a little smaller relative to larger countries. 


We have a large immigrant population, so like 2 million or so immigrants live in Switzerland. So that's about like a quarter of the entire population in the country. 


And then most importantly probably there is just a huge variety in benefit levels across the country. So the benefits system, basically, is completely in the hands – or largely in the hands – of the municipalities. So there are about like 2,000 or so municipalities across Switzerland and they have the discretion to set their own benefit levels. And so that means that there's just huge variation across the country. So like, on average, we have about a social welfare level of like 1,000 or 300 or so Swiss francs, which, you know, depending on the exchange rate that you use, is about £1,100 or so. That's the average, but then there is variation that it goes like below 750 francs to up to twice the average amount that you get in some municipalities. And so that variation is very useful because it means that there the incentives to engage in sort of welfare migration, right, are actually relatively huge because of these large differences between municipalities.


Alan Renwick  10:23

So what you're looking at is how people move around within Switzerland, essentially- 


Moritz Marbach  10:28

That's correct.


Alan Renwick  10:28

And you're looking at whether it's the case, yeah. So you're looking at whether immigrants to Switzerland are moving around in Switzerland in a way that looks like they're moving because they're going towards higher benefits in particular parts of Switzerland. Is that-


Moritz Marbach  10:43

That is correct.


Alan Renwick  10:43

Do you want to just tell us a little bit more about exactly what kinds of data you've got that allow you to examine that?


Moritz Marbach  10:50

Right. So what we do is we are looking at changes in benefit rates. So over this like 10-year period municipalities started to transition into what is called the SKOS standard. So because of that variation in benefits levels across Switzerland, the national government in support with a non-government organisation, it's called SKOS, to align benefit levels. So there is this idea that, you know, there should be some harmonisation and sort of like, you know, like more similar benefit rates across the board. 


And so over the last couple of almost like two decades now, municipalities start to transition into this common standard. And that process is largely due to cantonal legislation. So cantons are – you can think of them as like states in the United States, so they sit in between the national government and the municipality level. And so these cantons, they start to make this SKOL standard compulsory at different points in time during our study period. And some, interestingly enough, then also transition out of that standard because they figured that they don't, you know, they figure it's not useful for them to be on that standard. So there's lots of variation in the municipality benefit rate that is actually induced by canton legislation and this like movement to transition to a more harmonised benefits system. 


And so these changes are what we are looking at. So we are looking at how immigrants react to changes in municipality level welfare benefit – changes in the welfare benefit level in a municipality. 


And so we do a couple of analyses. One of them is that we look at like: to what extent are people moving away from places that lower benefits? Because like, you know, like some municipalities are way above the SKOL standard that's getting introduced by this canton legislation. That means that like, when they like transition into that standard they need to lower the benefit level, right? And so the question is, then, does this lowering of the benefit make people leave? Are they more likely to leave, right? And so what we find is that there is no effect on immigrants. So we don't see that like once the municipality lowers benefits more people are leaving these places among the immigrant population. We do see that actually citizens – there is a little bit of an effect for citizens. So in places lowering benefits, we do see that like some citizens start to move out. But like among the immigrants the effect is, is really muted. 


Similar, we also don't see that like more... We don't see like pronounced effects from like immigrants moving to places that increase the benefit rate, right. So when places like [inaudible] have to increase the benefit rate because they transition into the standard, we don't see that in these places, like more immigrants move to these types of municipalities. 


And the last part of the analysis is sort of that we like to see to what extent if people do move. So if immigrants on welfare move, do they tend to get more money after moving, right? Like do they realise the potential gains that they could get by moving? And so what we see is that after a move, on average, immigrants tend to get about like 22 Swiss francs more as compared to before the move. This compares to about like 15 or so Swiss francs for citizens. So this is monthly. So you know, like, again, like, depending on the exchange rate you're using, we are looking at about a little less than maybe like £20 or so for immigrants more per month than after they relocate. 


And this is sort of like a really small effect if you think about sort of this huge variation in Switzerland. So like, you know, like if we are not only looking at the extremes, but like even like looking at municipalities that you know like are about like as generous as the 80% of the most generous benefits and compare that to the bottom 20%, then like that sort of discrepancy amounts to like about like 100 or 50 or so Swiss francs. So meaning: if immigrants were to engage in this type of welfare migration, which they really sought to optimise the amount of welfare they receive, then you know like they could easily make like 150 or so Swiss francs per month by moving from like a very low-paying municipality to one of the high-paying municipalities. But in what we see is that, you know, it amounts to less than 22 or so Swiss francs on average.


Alan Renwick  15:39

So the big question here is: do immigrants in fact, move towards higher welfare benefits? And the answer that you're giving is, well, largely no.


Moritz Marbach  15:49

Yeah, I mean, like, when it comes to the actual propensity to move, it's really like, there's, like, you get like some small effects. In some of our statistical specifications we get some small effects, but they're so tiny that you know, like, it amounts to like one additional immigrant per 10,000 or so capita. So like, it's really that the substantive effects that we can find in our data – which is relatively large, which means that we can actually find very small effects – but in substantive terms, these effects are so minor, that it's negligible. And then of course, like, when it comes to the actual payouts in terms of like the additional amount received by relocating, again, they are so low, and they are like, it doesn't look like that the idea of like, the amount of social welfare you can get in a place is an important part of the migration calculus that immigrants do when they decide on where to relocate within Switzerland.


Alan Renwick  15:51

What is going on, then? Was Charles Tiebout just wrong? Are people just kind of randomly moving around the country without any order? Or is there something else that is actually shaping their movements around the country?


Moritz Marbach  17:01

Yeah, of course not. I mean, like, people don't move randomly. 


So like one of the best predictors is co-ethnic networks. So like we in our data, which is like immigrants and citizens on welfare, we see that one of the best predictors is that they move to places in which they have like many co ethnics, and in which housing costs are low. So those are like the two most important predictors that we can find. 


The unemployment rate, interestingly, is not so much of a predictor. It's one of the things that you know, like probably like people like immediately think of – it's sort of like, you know, like places with less unemployment are very attractive. We don't see much of an effect there, but that's largely because of the low baseline – like unemployment is so low, in particular during the period that we study in Switzerland, that it's sort of like not very predictive for the patterns of migration among welfare recipients. But housing costs are [predictive] and like the co-ethnic networks [as well].


Alan Renwick  17:57

And it's interesting because we were talking earlier about how there seems to be this shift in the literature from Tiebout's very wide spectrum of interest to the narrow focus on the benefits. And essentially what you're saying is: yeah, that focus is too narrow. It's not just benefits that people are thinking about; actually, they're thinking about all of the other things that everyone thinks about in their life, about what might shape their well being. And then, you know, all of these factors come into their decision about where they're going to locate themselves.


Moritz Marbach  18:26

Yeah. So like Charles Tiebout was particularly interested in understanding, like, this idea of how much public goods and services you like per tax dollar basically, right. I think it's not correct to characterise that he was like interested in sort of like lining up all the pull and push factors, right, that also play a role. Like certainly people don't just engage in migration purely to... Like public goods are only one of the factors that may come into a migration calculus, but of course there are other important factors. And like, it was not... Like I mean, like Charles Tiebout was not engaged in trying to sort of like enumerate all these factors. Like his interest was in this particular question between the trade-off of public goods and tax dollars, and then also like how actually municipalities react to – how local units react to or engage into – sort of competition and what it means to public good provision.


Alan Renwick  19:22

Can we generalise from Switzerland? So you're focusing here very much on Switzerland and movements within Switzerland. Can we generalise to movements within other countries and indeed thinking about movements between other countries as well?


Moritz Marbach  19:36

Right. So that's an important question. 


So as you rightly point out, like, we study like subnational welfare migration, or the movement of those on welfare in the Swiss context. We think of this case as a most-likely case to find this type of behaviour that scholars that subscribe to the welfare magnet hypothesis – that Switzerland is sort of a good case and gives us the ability to detect this type of behaviour because it's sort of like a most-likely case. So in that sense, like, we think it's plausible to argue that we sort of identified an upper bound here. So if anything, the effects we find in Switzerland should sort of like be an upper bound. 


In other contexts in which the differences between the amount of social welfare benefits you can get are certainly like much, much smaller, right. Like few countries have these huge differences locally in terms of like the benefit levels. And so in that sense, like, we think of it as sort of an upper bound for subnational welfare migration, but you're right that it could be that when it comes to international migration – so when people cross national borders – that the calculus could be different for immigrants. And we certainly need more research on that. 


But the fact that the differences between the local level units – the municipalities and the benefit levels – that these are so large, that they come close to sort of the differences we observe across countries, it is not, you know, like too far fetched to take this evidence as suggested that there is probably also not much of this type of benefit tourism across countries. But it is something that we need to study more closely and where you know, like, we just need much, much better data from governments, which is, frankly, often not available. And so like, it's hard to sort of look into this in more than the countries that happen to provide such data for research.


Alan Renwick  21:35

And presumably often moving from one country to another country is just much more costly, it's much more hassle, there's much more change. So you would expect that side of the equation potentially to be much harder for cross-country migration than for what you're seeing in Switzerland-


Moritz Marbach  21:50



Alan Renwick  21:51

-Which would lead you to, again, expect that the effects might be smaller than you're finding – even smaller than you were finding.


Moritz Marbach  21:59

Exactly, like even smaller than we're finding. Like among the small effects that we do find, like, we would expect them to be even smaller. 


But you're absolutely right. When it comes to cross-national migration, the costs are much larger typically than within-country migration, right. So, in addition to just the pure physical relocation costs, we are also talking about like costs in terms of language learning and adjustments to you know, like, the new like, institutional environment, etc., etc. So like, yeah, you're absolutely right – the cost of international moves are much larger typically than like sub-national moves. 


Alan Renwick  22:33

Okay. So what should policymakers learn from this analysis? We've been talking about the methodology and the political science of this, but there are important policy implications from this work as well.


Moritz Marbach  22:43

Yeah. So I think like, it's interesting that, you know, like, when you look at sort of, like, across Europe, in the last couple of years, the welfare magnet hypothesis has really shaped policymaking quite a bit. In particular, like in the context of the 2015-2016 refugee protection crisis across Europe, you really see that like governments are concerned that immigrants – in that particular context, asylum seekers – only come because of the welfare state. And so like many countries are engaged in sort of this like race to the bottom nationally, but then also like sub-nationally, in order to deter immigrants from coming. So they lowered benefit levels or they tightened eligibility requirements, hoping that this is sort of like leads like asylum seekers to be less likely to come and seek asylum in a particular country. 


And so this obviously, you know, like has huge consequences, not only for the asylum seekers, and for immigrants more generally, but like also for everyone else on welfare if you tighten eligibility requirements, and cut welfare benefit rates across the board, right. 


And so like, I think what our paper really brings to is just take a step back and actually check to what extent we can actually find evidence of this type of behaviour and to what extent lowering benefit levels actually deters immigrants from going somewhere or like whether it pushes immigrants to leave a certain place. And so I think much of this, you know, like of our research shows that probably not: it seems that there's very little evidence that these types of policies have any sort of measurable effect when it comes to sort of like the intention of like deterring and having people not moving to a particular place. But of course it has huge consequences then for those people being affected, right. So like, when you lower social benefit rates, you might push people into poverty eventually, with all the consequences that that then has.


Alan Renwick  24:49

Does that apply in the UK as well? I'm just thinking back to the 2016 Brexit referendum (our conversations often go back to that). And in the run up to that there was a lot of talk about how the UK, because it has a non-contributory benefits system – because you get the benefits as soon as you arrive in the country, pretty much; you don't have to build up the period of working within the country before you're entitled to those benefits – that somehow the UK was uniquely attractive to people who might be engaged in benefits tourism. And therefore, David Cameron, at that time was seeking to change the benefit system so that people from outside the UK could be excluded while people in the UK were still getting the same benefits as previously. And I guess, you know, that's a line of thinking that we have continued to see in the years since the referendum. 


Does your evidence have implications for that kind of thinking as well?


Moritz Marbach  25:47

Yeah, I think it does. I mean, like, at this point, right, there is this condition. Like when, like, across most immigration tracks in the UK, there is this conditional that if you don't have the records to access public funds for a good amount of years – it depends on which immigration track, which visa track you're on – but like for most you're not allowed to access public funds, right. And so this 'no recourse to public funds' or NFPF E condition largely sort of like comes out from exactly that type of thinking that you just described. 


But then, as a consequence, what we now observe locally across the United Kingdom, in particular in England, is that we now like start seeing like this sort of parallel welfare state on the local level. So local authorities still have the responsibility to support those in need, in particularly when it comes to families in need and people affected by serious health conditions. They still like are required by law to support independent of your immigration status. And so now what happens is that you see on the local level, so local authorities like across the United Kingdom, that like since they have to support these people in some way there is now a huge variety in how the support is realised. 


And so you can clearly see that some local authorities are clearly, you know, concerned that if they might provide too much support, quote unquote, that then they will see a lot of people coming to them, rather than then, you know, like, hoping that they sort of can reduce the amount of people coming by sort of like engaging in less support. And so like, while we don't have good data on this, it seems that sort of that there is a risk that local authorities in the United Kingdom also engage in a race to the bottom right – that they sort of like fear that they will when they provide adequate support, that this constitutes a magnet and that more and more immigrants will come. 


But our research clearly shows that, you know, like, in the context of Switzerland, where these differences are much larger and sort of like public information about these differences is much more readily available, that sort of even in this context, we really don't see much of this type of behaviour. Other factors like co-ethnic networks and housing prices – those are the relevant pieces. Right. 


So I think what's important for the United Kingdom here to sort of like take into account is really that because of that power welfare state on the on the local level, it is sort of like probably not a good idea not to provide the adequate support for those in need on the local level purely because of this concern that this will attract more people to come to a particular local authority or like a council or a borough or something.


Alan Renwick  28:32

Well, that's a very clear message for policymakers and a very good point on which we can end.


Moritz, that's been a fascinating conversation. Thank you so much.


Moritz Marbach  28:41

Thank you for having me, Alan.


Alan Renwick  28:42

We've been looking at Moritz Marbach's paper co authored with Jeremy Ferwerda and Dominik Hangartner. It's called 'Do Immigrants Move to Welfare? Subnational Evidence from Switzerland'; it's available now in the American Journal of Political Science. 


And as ever, those details are in the show notes for this episode, which also include a link to the paper. 


Next week, in the run up to the 25th anniversary of the Belfast Good Friday Agreement in Northern Ireland, we'll be looking at public opinion in Northern Ireland towards the past conflict and the options for the future, and at the degree to which the Brexit referendum of 2016 – we've just been talking about it there and we'll be talking about it again – the degree to which that shifted the debate. 


Remember, to make sure you don't miss out on that or other future episodes of UCL Uncovering Politics, all you need to do is subscribe. You can do so on Apple, Google Podcasts or whatever podcast provider you use. And while you're there, we'd love it if you could take a moment of time to rate or review us. 


I'm Alan Renwick. This episode was researched by Alice Hart and produced by Conor Kelly and Eleanor Kingwell-Banham. Our theme music is written and performed by John Mann. 


This has been UCL Uncovering Politics. Thank you for listening.


Papers mentioned

Tiebout, Charles M. “A Pure Theory of Local Expenditures.” Journal of Political Economy 64, no. 5 (1956): 416–24. http://www.jstor.org/stable/1826343.