WIFO: Welfare Magnets, Taxation and the Location Decisions of Migrants to the EU

The results show that individuals prefer larger regions, both in terms of population as well as in terms of the area, although the latter coefficient is rather small. They also indicate that, as expected, a higher unemployment rate decreases while a higher income increases the probability of moving to a region. Interestingly, the effects are not positive for all individuals. Although the parameter of the unemployment rate is negative for the majority of migrants and the vast majority of migrants ceteris paribus prefers regions with a higher average income, the parameter of the former is positive for about 16.4% while the parameter of the latter is negative for about 5.3% of all migrants. This does, however, not necessarily indicate that these individuals actually prefer regions with higher unemployment rates and/or lower income, but it probably rather shows that the aggregate income and unemployment figures are not relevant for a segment of migrants to the EU-15.13Ethnic networks increase the attractiveness of a region as target location for all migrants. At the mean estimated parameter, an increase in the ethnic network size of one percentage point almost doubles the odds of choosing a region. The effect of ethnic networks is, however, decreasing as indicated by the coefficient of the squared network variable. This suggests that ethnic networks can reach an optimal size beyond which the attractiveness of a region actually decreases (for example because of rising housing prices or a decrease in wages). The attractiveness of a region decreases with the distance to the source country which indicates that mobility costs do play a role in the location decision. The negative effect of distance is, howA higher score of the  MIPEX Labour Market Access Index increases the probability of moving to a region: countries with more liberal rules governing migrant's access to the labor market as well as to active labor market policies thus attract a—ceteris paribus—higher share of migrants.Read more