published in: Journal of Population Economics, 2005, 18(1), 93-112
With reference to the EU enlargement, a framework is derived which allows the study of the
effect of unemployment benefits on the migration decision. While benefits simply increase the
expected gain for risk neutral individuals, they work as an insurance device for risk averse
migrants; the results for the two groups might differ. Thus, the migration decision is
reformulated as monetary lottery and a utility function exhibiting constant relative risk
aversion is applied. The model suggests increased migration incentives independent of taste
and a positive selection of risk neutral individuals. Furthermore, risk averse migrants are
likely to be found in countries with more evenly distributed incomes, other things equal. While
the calibration of the model shows a significant change in migration incentives, empirical
results on aggregate data for South-North migration within the EU are rather ambiguous.
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