Wednesday, December 04, 2013

Welfare State Arbitrage

Trigger

Just read (12/3/2013)  here and here (both German language) that there is increasing concern that poor people from e.g. eastern member countries of the European Union may choose to settle in Germany to benefit from generous German social benefits.

These articles even speak of a migratory wave coming to Germany. A state welfare court in Germany has already decided that German regulations or laws to restrict access to welfare benefits are incompatible with European Union law.

Incentives For Migration

Few people nor economists would doubt that a generous welfare state attracts inward migration to take advantage of the benefits.

Economists (I believe Milton Friedman among them) have for a long time argued that comprehensive welfare states need to prevent free movement of humans or labor or they would risk to go broke.

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