1. European labour migration and welfare states Olaf van Vliet
NISZ, 7 July 2016

3. Labour migration in the Netherlands
Source: SEO (2014)

4. Outline Labour market effects Welfare state effects Some evidence
Political economy

5. Labour migration in the EU: economic motives
EMU – optimum currency area
Mundell criterion
Increases welfare

6. Welfare effects of labour migration
Welfare gains in all countries as a result of better matching on labour markets
Redistributive effects (employment, wages) within countries, variation across:
Sectors
Occupation
Skill-level
At the individual level: “winners and losers”

7. Migration and welfare states (1)
Efficiency hypothesis:
‘bad risks’ are attracted to countries with generous social security
‘good risks’ are attracted to countries with low taxes and contributions
downwards convergence: ‘social race to the bottom’

8. Migration and welfare states (2)
Compensation hypothesis:
Immigration leads to economic insecurity (employment and wage effects)
To compensate the increased economic insecurity, governments provide more social security

9. Migration and welfare states (3)
Taken together:
Compensation hypothesis increased demand for social security
Efficiency hypothesis budget to fulfill this demand undermined
Dilemma for policy-makers

10. Evidence: labour market effects in the Netherlands
Strong heterogeneity across sectors
SEO (2014): some evidence for displacement effects at the macro-level (construction, horticulture, road transport); not at the micro-level.
International competition: winners and losers
Bogus constructions: companies circumventing legislation, false self-employment

11. Evidence: welfare states
Many studies on the ‘welfare magnet hypothesis’
Various push and pull factors
Employment and wages are the main driver
Generosity of social policy: small effects at most
Social policy
Migration

12. Budgetary effects
Source: SEO (2012)

13. Public social expenditure (% GDP)
1980
2005
2014
Austria
22.1
26.8
28.4
Belgium
23.5
25.6
30.7
Denmark
24.4
27.3
30.1
Finland
18.0
25.0
31.0
France
20.6
29.6
31.9
Germany
21.8
27.0
25.8
Greece
10.3
21.1
24.0
Ireland
16.0
15.8
21.0
Italy
24.9
28.6
Luxembourg
20.3
22.0
Netherlands
24.8
24.7
Portugal
9.6
22.8
25.2
Spain
15.4
20.9
Sweden
26.0
28.7
28.1
United Kingdom
16.3
20.2
21.7
Mean
19.1
Standard deviation
4.8
3.6
3.3
Coefficient of variation
0.3
0.2
0.1
Hoogte werkloosheid en vergrijzing
Bruto. niet netto
Totaal. niet per programma
Etc.
Source: OECD 2016

14. Net unemployment benefit replacement rates 2009
Source: Van Vliet en Caminada (2012)

15. Net unemployment benefit replacement rates
Source: Van Vliet en Caminada (2012)

16. Net social assistance benefit replacement rates
Source: Wang and Van Vliet (2016)

17. Net social assistance benefit replacement rates
1995
2000
2005
2009
Mean OECD-21
48.8
45.9
45.0
45.2
Standard deviation
9.4
9.3
9.8
12.1
Coefficient of variation
0.19
0.20
0.22
0.27
Mean EU-14
49.8
46.6
46.7
48.1
9.1
11.8
0.25
Source: Wang and Van Vliet (2016)

18. Political economy Efficiency and compensation hypothesis
Embedded liberalism hypothesis
Brexit
EU-Ukraine Association agreement
CETA
TTIP
Migration
Welfare state reform

19. Political economy (2) Not much research yet
Variation across welfare state programs (social assistance benefits, unemployment benefits, family benefits, health care, education)
Real pressure on welfare states versus perception
Solidarity
Migration
Welfare state reform

20. SOLID
“Solidarity under strain – A legal, criminological, and economic analysis of welfare states and free movement in the EU”
Research project 2016 – 2020:
Pressure from labour migration on national welfare states
Bogus constructions, payrolling and subcontracting
Leiden University - Leiden Law School:
Department of Economics
Department of Labour Law
Department of Criminology
Department of European Law

21. SOLID