Removing the wall around welfare: What do We learn from A8 immigrants in the UK?

Abstract

SUMMARY A relevant question within the growing debate on immigration policy concerns the impact of granting immigrants free access to the welfare system. I analyse the case of the European 2004 Accession (A8) countries and the lift of the temporary limitations to benefit eligibility that citizens from these countries faced until April 2011 in the UK. When the restrictions are relaxed A8 immigrants claim more benefits, but labour supply adjustments occur mainly for those who are more in need for assistance, namely women and the less educated, especially in the presence of children. Moreover, I provide evidence on two potential indirect effects. First, my results support the absence of magnet effects, as arrivals do not change from before to after the change in eligibility rules. Second, I show that granting immigrants access to welfare does not change the composition of the incoming flows.