Lowering Welfare Benefits for Immigrants: Intended and Unintended Consequences for Individuals and their Families
In this paper we study both primary and secondary effects of a large welfare reform in Denmark that targeted refugee immigrants. The reform, referred to as “Start Aid”, was proposed in March 2002, approved by June, and enacted on July 1st of 2002. Individuals who were granted residency just before that date were eligible for the same Social Assistance (SA) levels as native Danes, while those who were granted residency after July 1st received up to 50 percent lower Start Aid levels. We first investigate the primary effect of the reform. We find that for males the reform resulted in a 100% increase in employment, driven solely by employment in unskilled jobs. We also show that the reform led to a dramatic drop in disposable income and induced disincentives were partly through means testing, and partly through a particular design feature of the reform, leading females who lived with their partner to withdraw from the labor force and welfare system and males to reduce their employment response, with potentially serious longer term consequences. Studying the secondary consequence of the reform, we find that it led to a 7-fold increase of women being caught stealing groceries in supermarkets, while men are more likely to commit violent crimes. We also show that children who received residency during the preschool age are 25% less likely to be enrolled in Danish daycares and preschools, and that children from single parent households completed less education. We finally illustrate that youths are more likely to take up work but also less likely to enroll in an education and more likely to commit both property and violent crime because of the reform.
Christian Dustmann ist Professor für Volkswirtschaftslehre am University College in London (UCL) und Gründungsdirektor des Centre for Research and Analysis of Migration (CreAM) in London. Er war Gastprofessor an der Harvard Universität in Cambridge, Mass., am European University Institute (EUI) in Florenz, an der Australian National University in Canberra und an Universität von Amsterdam. Er ist zur Zeit Präsident der European Association of Labour Economists (EALE). Im Mittelpunkt seiner Forschungsinteressen steht die Migrationsökonomie, vor allem die Erklärung von Migrationsströmen, temporärer Migration und der Auswirkungen der Migration auf Arbeitsmarkt und Sozialstaat. Er hat außerdem wichtige Beiträge zur Arbeitsmarkt-, Bildungs- und Familienökonomie geleistet. Christian Dustmann hat u.a. in American Economic Review, Economic Journal, Quarterly Journal of Economics and Review of Economic Studies publiziert.
Gemeinsame Veranstaltung mit Berlin Applied Micro Seminar (BAMS) und unterstützt durch SFB/TRR 1990 Rationality and Competition.