Determinants of immigrants’ cash‐welfare benefits intake in Spain

Much of the literature on immigrants’ cash‐welfare benefits use has focused on countries with a large tradition of receiving immigrants and with well‐established welfare states. The purpose of this paper is to contribute to this literature by analyzing differences in cash‐welfare benefits receipt between immigrants and natives and their determinants in Spain, a country with a small level of social assistance and a welfare state heavily reliant on conditioned access to pensions; and an unprecedented immigration boom.

Different probit models of social program intake are estimated for immigrants and native‐born individuals using pooled cross‐sectional data from the 1999 to 2009 Spanish Labor Force Survey (LFS).

Results show that a negative residual welfare gap exists and that it is mainly driven by recently arrived immigrants, whose legal status or insufficient contribution is likely to hamper participation in social programs. In addition, it is found that immigrants with more than five years in the host country are more likely to receive unemployment benefits than natives, consistent with findings in other countries. These findings hold, regardless of immigrants’ continent of origin.

Return migration related (or not) to an amnesty may be worrisome, as both return migration and under‐reporting of immigrants may generate deterministic biases in an analysis. Although the direction of the biases caused by return migration is not always obvious, sensitivity analysis has been undertaken to evaluate the extent of this problem by comparing the population sizes for the different entry cohorts of immigrants at each LFS. While there is some variation in sizes across LFS, no clear pattern is observed that would raise major concerns of return migration (as there are no regular patterns for decreases in cohort sizes). Nonetheless, for this to be a problem, it needs to generate a deterministic bias in any analysis. Analyzing the demographic characteristics of the different cohorts of immigrants at each of the different LFSs only reveals small changes across surveys; in essence, the socio‐demographic characteristics of the cohort remain quite stable across surveys, implying that no deterministic bias would emerge in an analysis.

The paper highlights the relevance of accounting for cohort of arrival in the host country, especially when welfare benefits are based on workers’ contribution. Indeed, failure to account for this would lead to the conclusion that immigrants are less likely to receive unemployment insurance (UI) benefits than natives. However, once cohort of arrival is included as a covariate, this paper finds that the lower UI intake is explained by the most recent immigrants, as their legal status and lower contributions hamper participation in social programs.