That’s how Cato Institute senior fellow Dan Mitchell describes the mix of high taxes and high spending on welfare that stunt the assimilation of immigrants to the developed world.
So what’s the problem? Why are immigrants failing to prosper?
To be more specific, thecountry’s extravagant welfare state acts as flypaper, preventing people from climbing in the ladder of opportunity.
The combination of generous benefits, high taxes and rigid labour regulations reduce the incentives and possibilities to find work. Entrapment in welfare dependency is therefore extensive, in particular amongst immigrants. Studies have previously shown that even highly educated groups of foreign descent struggle to become self-dependent in countries such as Norway and Sweden. …The high-spending model is simply not fit to cope with the challenges of integration.
The part about “highly educated groups” is particularly important since it shows that the welfare trap doesn’t just affect low-skilled immigrants (particularly when high tax rates make productive activity relatively unattractive).