The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark

Marianne Frank Hansen (), Marie Louise Schultz-Nielsen and Torben Tranaes ()
Additional contact information
Marianne Frank Hansen: Danish Rational Economic Agents Model, DREAM, http://www.dreammodel.dk/mfr_en.html

No 201501, DREAM Working Paper Series from Danish Rational Economic Agents Model, DREAM

Abstract: All over Europe, ageing populations threaten nations’ financial sustainability. In this paper we examine the potential of immigration to strengthen financial sustainability. We look at a particularly challenging case, namely that of Denmark, which has extensive tax-financed welfare programmes that provide a high social safety net. The analysis is based on a forecast for the entire Danish economy made using a dynamic computable general equilibrium model with overlapping generations. Net contributions to the public purse are presented both as cross-sectional figures for a long time horizon and as average individual life-cycle contributions. The main conclusion is that immigrants from richer countries have a positive fiscal impact, while immigrants from poorer countries have a large negative one. The negative effect is caused by both a weak labour market performance and early retirement in combination with the universal Danish welfare schemes.

Keywords: immigration; public finances; forecasting; denmark (search for similar items in EconPapers)
Pages: 33 pages
Date: 2015-02
New Economics Papers: this item is included in nep-age, nep-cmp, nep-eur, nep-ger and nep-mig
Note: IZA DP No. 8844
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://ftp.iza.org/dp8844.pdf First version, 2015 (application/pdf)

Related works:
Working Paper: The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dra:wpaper:201501

Access Statistics for this paper

More papers in DREAM Working Paper Series from Danish Rational Economic Agents Model, DREAM Amaliegade 44, DK - 1256 Copenhagen K. Contact information at EDIRC.
Bibliographic data for series maintained by Peter Stephensen ().