Concept and argument
Peterson and Rom (1989) argued that because US states set different benefit levels, poor households move to generous states, which then cut benefits to limit costs, an application of the Tiebout model to welfare. They called for a national benefit standard (1990).
The race to the bottom
Magnet fears can trigger a race to the bottom, tying the debate to the core fiscal federalism question of which level of government should run welfare. Berry, Fording and Hanson (2003), however, found the interstate race weaker than claimed.
Evidence and debate
Gramlich and Laren (1984) estimated some benefit-driven migration, while Levine and Zimmerman (1999) found very little in individual data. Borjas (1999) showed new immigrants cluster in generous states, and De Giorgi and Pellizzari (2009) found similar patterns in Europe. The debate feeds welfare chauvinism discourse.
FAQ
- What is the welfare magnet hypothesis in simple terms?
- The idea that generous welfare attracts poor people or immigrants like a magnet.
- Does much welfare migration actually happen?
- Most studies find small effects, though new immigrants' location choices may respond.
Sources reviewed: 2026-10-26
References
- Gramlich, E. M., & Laren, D. S. (1984). Migration and income redistribution responsibilities. The Journal of Human Resources, 19(4), 489–511. An early estimate of benefit-driven migration.
- Peterson, P. E., & Rom, M. C. (1989). American federalism, welfare policy, and residential choices. American Political Science Review, 83(3), 711–728. The landmark statement linking magnets and benefit competition.
- Peterson, P. E., & Rom, M. C. (1990). Welfare magnets: A new case for a national standard. Brookings Institution. Argues for a national welfare standard.
- Borjas, G. J. (1999). Immigration and welfare magnets. Journal of Labor Economics, 17(4), 607–637. Tests whether immigrants cluster in generous states.
- Levine, P. B., & Zimmerman, D. J. (1999). An empirical analysis of the welfare magnet debate using the NLSY. Journal of Population Economics, 12(3), 391–409. Finds little welfare migration using panel data.
- Berry, W. D., Fording, R. C., & Hanson, R. L. (2003). Reassessing the "race to the bottom" in state welfare policy. The Journal of Politics, 65(2), 327–349. Questions the race-to-the-bottom claim.
- De Giorgi, G., & Pellizzari, M. (2009). Welfare migration in Europe. Labour Economics, 16(4), 353–363. Evidence on welfare migration in Europe.