Are immigrants a burden for the state budget? Review paper

Pawel Kaczmarczyk

No 2013/79, RSCAS Working Papers from European University Institute

Abstract: The twentieth century is commonly acknowledged as the “age of migration”. During the last 100 years population movements have intensified and, more importantly, their structure changed significantly. In terms of the geographical distribution of immigrants the European Union and traditional immigration countries became the most important target regions. In these countries immigration is commonly presented as a threat to host economies and societies. Along with this the fiscal impact of immigration are ones of the most controversial topics in recent debates on migration. Against this background this paper aims at discussing and synthesizing both theoretical and empirical literature on the fiscal impact of immigration. We hypothesize that the fiscal impacts of immigration are complex and dynamic and thus a proper assessment demands a careful empirical strategy. There is no clear or coherent theoretical framework to explain the fiscal effects of migration. The outcomes of empirical studies are mixed and they are not unequivocal. Notwithstanding, they show that, generally speaking, the fiscal impact of immigration is small. Moreover, there is no clear impact of skill level on the fiscal position of foreigners. What really matters is, instead, the type of migration, labor market incorporation (absorption) and the institutional framework at destination (the structure of the welfare state). In terms of empirical strategies we would recommend dynamic approaches, which account for the effects resulting from demographic ageing.

Keywords: welfare system; distributional and fiscal impacts of immigration; welfare magnet (search for similar items in EconPapers)
JEL-codes: F22 H55 H61 J11 J61 J68 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Are immigrants a burden for the state budget? Review paper (2013)
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