Study: Testing The Welfare Magnet Hypothesis
From the American Economic Association:
The black line shows net immigration flow from places inside the EU, whose citizens received full welfare benefits throughout the period. The red line indicates the flow into Denmark from outside the EU. (The linear trends were removed in both series to ease comparison.)
Migration to Denmark from inside and outside the EU moved in parallel until the 2002 scheme was introduced. There was a sharp drop in non-EU immigrants, but the numbers completely recovered 3 years after it was repealed and then dropped again upon reintroduction.
The timing and divergence between the two groups is a clear indication that Denmark’s generous and well-publicized welfare program attracted people to the country.
The authors estimated that the cuts reduced the net flow of immigrants by about five thousand people per year. Their work shows that social insurance programs and immigration are in fact intimately related issues.