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Projecting the net fiscal impact of immigration in the EU

A new study by scientists at the Joint Research Centre concludes that the increased labour market participation of non-EU migrants could generate large fiscal gains for host countries.

According to the study, there are large differences between the tax contributions of native-born citizens, EU migrants and non-EU migrants, and during the next 20 years the contributions of these three groups will evolve very differently. Native-born individuals currently show a higher net fiscal contribution than migrants from outside the EU, and a similar contribution to migrants from inside the EU. However, due to the ageing of native populations, this relationship is likely to reverse in the near future. 

Key findings of the study include:

  • Native-born citizens will become bigger net beneficiaries of public expenditure than non-EU migrants, even if no measures are taken to facilitate labour market access by non-EU migrants;
  • EU migrants in particular will be big net contributors to government budgets in the future;
  • If no measures are taken to improve the labour market integration of non-EU migrants, EU migrants will in the future be the only group providing a positive net contribution to government budgets;

  • Better labour market opportunities for non-EU migrants would lead to large fiscal gains: if non-EU migrants were to have the same level of participation in the labour market as native-born citizens and EU migrants, they could generate considerable fiscal gains for their host countries. This would help to offset the burden created by the increasing pension costs that the ageing native population will generate.

This graph shows projected net fiscal contributions by immigrant status (EU baseline scenario), 2015 - 2035:

© European Commission, 2020 - JRC elaboration with CEPAM-MIC on EU SILC-DATA.

In November 2020 a new Action Plan on Integration and Inclusion will be presented. It will set out concrete actions and strategic guidance for EU Member States, including financial support. 

Find more information on this research and the full 116-page report here.

Authors:
Alain Belanger; Michael Christl; Alessandra Conte; Jacopo Mazza; Edlira Narazani
Posted by:
Olivia Long (Migration Policy Group)