No Point in Being Selective? Evidence from Italy on How Restricting Migrants’ Access to Minimum Income Benefits Does (Not) Affect Their La-bour Supply

Amid increasing salience of immigration in European Union member states, debates on mi-grants being a “burden to the welfare state” gain prominence. In this light, member states repeatedly undertook reforms to curtail access to benefits for diverse groups of migrants. However, the effectiveness of these efforts largely depends on whether migrants adjust their labour supply in response to such reforms and whether the labour market can absorb poten-tial surplus labour supply. Adding to a body of literature examining the labour market ef-fects of benefit restrictions, this paper analyses the implications of the Italian reddito di cit-tadinanza, which was introduced in 2019, with special attention to benefit restrictions in regard to foreigners. While under the previous regime, foreigner were eligible to claim a minimum income benefit after two years of legal residence in Italy, the reddito di Cittadi-nanza required them to prove ten years of legal residence, thus excluding most of the foreign population. The reform poses a discontinuity, uniquely allowing to evaluate the labour mar-ket implications of benefit restrictions. Drawing on quarter-level EU Labour Force Survey data from 2016 to 2024, I apply a difference-in-differences strategies, showing that the re-form had only a marginal effects on the labour supply foreigners relative to natives. The result appears robust across several dimensions, thereby calling into question the rationale for benefit restrictions that specifically target migrants. However, there are small positive effects for low-skilled individuals and further heterogeneity analyses exhibit positive effects in specific regions.