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The economic reform started in 1978 progressively pushed China into one of the largest market-oriented economies in the world. The reform also triggered substantial transformations in the labor market. The labor surplus generated by increased productivity in rural areas, together with the growth in labor demand driven by export-oriented sectors in urban areas, contributed to the largest movement of workforce in history. The rural-to-urban migration currently taking place is substantially contributing to the sustained economic growth of China – especially of its cities – but also raises important issues about segregation and inequality in the urban labor market. In contrast, migration has also significant consequences for the individuals left-behind in rural areas. How economic conditions in sending households and villages are affected by the remittances sent by migrants, or by their return from the cities, is crucial for assessing the benefits of migration. The gradual decline of state-owned companies and the rise of the private sector emphasize on the one hand the consequences that labor reallocation has on the occupational mobility of the workforce and on the other the crucial role that entrepreneurship will have in the future development of China. Pulled by economic growth, investments in education have substantially increased especially in urban areas, posing challenges on how skills can be efficiently allocated in the labor market. In the background, reforms of the welfare system have slowly started to take place. One clear challenge is how the social insurance and pensions system can be transformed into one that is more compatible with a market economy. Another issue will soon be its sustainability, considering the imminent shrinking of the labor force caused – among other things – by the one-child policy.

While there is evidence that return migration promotes entrepreneurship and self-employment of those who migrated, previous studies have not focused on whether migration provides the same benefits to individuals who did not migrate. Using a unique dataset that provides information on both current and return migrants in rural China (RUMiC), we investigate the impact of migration on entrepreneurship among individuals with no migration experience. We explore the self-employment choices of individuals who live in households with return migrants and individuals who live in households that have migrants currently in the city, comparing them with individuals living in non-migrant households. Our methodology allows us to control for the potential endogeneity between the migration and self-employment decisions. The results show that return migration promotes self-employment among household members who have not migrated. However, left-behind individuals are less likely to be self-employed when compared with those living in non-migrant households.

Economic theory predicts that unemployment benefits may increase expected income and reduce its volatility, thereby attracting immigrants to countries which implement such programs. This article aims to explore whether and how changes in countries’ unemployment benefit spending (UBS) affect immigration.

Data are collected for 19 European countries over the period 1993‐2008. The relationship between immigration flows and UBS is first tested using the OLS technique. Instrumental variable (IV) and generalised method of moments (GMM) are then used to address reverse causality.

While the OLS estimates suggest the existence of a moderate within‐country welfare magnet effect for the inflows of non‐EU immigrants, the IV approach reveals that the impact is substantially smaller and statistically insignificant when GMM techniques are implemented.

Since information on the immigrants’ country of origin is not available, it is not possible to exclude that for immigrants coming from certain areas, unemployment benefits constitute a strong incentive to immigrate. This hypothesis awaits further research, once detailed data is available.

This paper complements previous literature on immigration and welfare by exploring the endogenous nature of welfare spending. The empirical results provide insights into the interaction between immigration and welfare policies.