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Projecting the net fiscal impact of immigration in the EU

Abstract: 

This report provides an analysis of the fiscal impact of migration in the European Union in the past and the future. It highlights that currently natives generally show a higher net fiscal contribution than extra-EU migrants and a similar contribution to intra-EU migrants. However, due to ageing of the native population, this relationship is bound to reverse in the near future. The report calculates that by 2035 an average extra-EU migrant would be a net beneficiary of public transfers, but to a lesser extent than the average native would, while intra-EU mobile citizens would continue being net contributors. The report also analyses six possible policy scenarios and their implications for the fiscal contributions of extra-EU migrants. These simulations highlight how acting on the size of the flows of new migrants without removing the obstacles to their full labour market integration would yield small fiscal benefits for the hosting country. Labour market policies targeted at increasing labour participation of migrants could generate large fiscal gains. To evaluate the static net fiscal impact of migration based on micro-data the analysis uses EUROMOD, a tax-benefit microsimulation model for the European Union enriched with data on in-kind benefits. This is based on OECD data for apportioning the cost of education social housing and health care provision. For projecting the long-run fiscal effect of migration, the simulations use CEPAM-Mic, a dynamic microsimulation projection model.