Transformation of the Welfare State in Service Oriented Economy

This research examines the influence of immigrational flows activated in the last 50 years on the sustainability of Welfare State policies. How could the inflow of cheap and mostly unskilled labor force affect the social policy of recipient country? On the one hand, migrants can be a good source of money. It appears to integral in the circumstances of aging of population and limited budgets. On the other hand, they may become the reason for a weakened social solidarity, which as some say is the core of Welfare State concept. In order to measure the dynamics of the size of public sector and its quality we’ll use the social expenses data and CWED, which contains the generosity scores for social programs. Evaluating a fixed-effect model we examine the effect of migration on these variables. The findings show that the effect of migration could primarily be seen on unemployment benefits. In this segment we could observe a vast negative correlation between stock of migrants in the country and the generosity of unemployment program. The effect is more sizable for Nordic countries.