Welfare State Generosity and Immigration Control in OECD Countries

This paper investigates the relationship between the generosity and organization of welfare states on the one hand, and the restrictiveness of immigration control in OECD countries on the other. In recent years, political concerns about the impact of immigration on the sustainability of welfare states have become widespread, and the potential fiscal burden that immigrants may represent for welfare states has appeared as an important rationale for calls to restrict immigration. In this article, we test a series of hypotheses on the relationship between the level of generosity and the institutional setup of welfare states on the one hand, and the restrictiveness of immigration policy on the other, assuming that generous welfare states create greater incentives for policymaker to increase barriers to entry. First, we assess whether more generous welfare states are also more likely to adopt restrictive (low-skill) immigration policies to limit possible costs. Second, we test whether the type of welfare state has an impact on the restrictiveness of immigration policies: universal systems or those drawing on non-contributory benefits may create greater incentives to restrict immigration because risks of free-riding are higher. In contrast, social insurance systems may provide lower incentives to restrict immigration because risks of free-riding are lower, and immigrants can more easily be excluded from benefits. We test these hypotheses on a panel of OECD countries, combining data on eligibility and replacement rates and newly released data on the restrictiveness of immigration policy.