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Abstract

This paper analyzes the effects of international transfers to finance infrastructure on net migration flows among countries within the EU. A new economic geography model is employed with common pool financed infrastructure investments to derive a set of empirically testable hypotheses about the effects of transfer payments to finance infrastructure investments on migration. A significant effect of structural fund expenditures is identified on the bilateral net migration of workers among the EU member countries. On average, a one percentage point increase in the expenditures on structural funds (in per cent of gross domestic product (GDP)) leads to a reduction in the measure of bilateral net migration by about 0.4–0.8%.