Lifetime net fiscal contribution of first-generation immigrants and their children for 42 regions of origin.
Many Western countries began immigration policies without feeling any need to monitor the long-term results. Indeed, many considered that immigration was an expedient response to labour shortages, and that the labourers, such as Turkish guest-workers in Germany, would probably eventually want to return home with their earnings at retirement. The United Kingdom seems to have begun its largest and most transformative policy in a typical fit of absent-mindedness. Workers were needed by London Underground, and that influx from the Caribbean began a de facto immigration policy, to which permissive legislation was added later, giving rights to all Commonwealth countries. In some sense it seemed a temporary expedient, and nothing more. Travel was by steamer, things happened slowly, and immigration proceeded steadily.
Western governments have rarely carried out large scale and detailed analyses of the benefits and costs of immigration with country-of-origin comparisons. Even now, it is hard to obtain good quality data on immigrants from different countries. For some host countries, even carrying out such analyses was deemed unseemly: immigration was seen as a fundamentally good policy, which should not be questioned. France was an example of a country which deliberately did not study such matters, because every citizen was a citizen, and comparisons are odious in the eyes of the Republic. As a result, French citizens are free to imagine the worst.
However, there are many general studies of immigrants’ contributions to the labour force, usually concluding that young immigrants are net contributors. Only studies which do the accounts over the entire lifetime (i.e. from the moment of birth or immigration to the moment of death or repatriation) give a full picture, in that young people become old, and require more services later in life. Many studies are often restricted to those coming specifically to work in the host country, and don’t include students and asylum seekers.
A typical finding is given in a 2014 OECD study:
https://www.oecd.org/migration/OECD%20Migration%20Policy%20Debates%20Num ero%202.pdf
Immigrants are thus neither a burden to the public purse nor are they a panacea for addressing fiscal challenges. In most countries, except in those with a large share of older migrants, migrants contribute more in taxes and social contributions than they receive in individual benefits. This means that they contribute to the financing of public infrastructure, although admittedly to a lesser extent than the native- born.
In contrast to these generally positive claims, albeit they admit some shortcomings, it is a welcome surprise to find that researchers in one country have been able to gather extensive official data from Statistics Netherlands which allows costs and benefits to be studied carefully in the long term, with results tabulated according to reasons for immigration, and by country of origin. At the moment this study of immigration to the Netherlands is in Dutch, but there is an English summary, and a full English translation is being prepared. If you want to contribute to that, so that the study might be read by English speaking governments, then the donation link is given here:
https://gofund.me/0523fc09
“The Borderless Welfare State” Jan van de Beek, Hans Roodenburg, Joop Hartog and Gerrit Kreffer, 2021, Amsterdam School of Economics.
http://www.demo-demo.nl/files/Grenzeloze_Verzorgingsstaat.pdf
(English abstract begins on page 19)
The authors stick closely to the economics of immigration, and report their findings in financial terms, without going into any deeper causes.
The report aimed to answer two questions:
1) What are the fiscal costs and benefits of immigration by migration motive (labour, study, asylum & family migration) and by region of origin? 2) To what extent can immigration provide a solution to the ageing population in the Netherlands?
The current report is an update of the Public Sector chapter of the report Immigration and the Dutch Economy (2003) by the Netherlands Bureau for Economic Policy Analysis (CPB). Both reports deploy the method of generational accounting to calculate the net contribution – revenues minus expenses – of immigrants to public finances, measured from the moment of their immigration to the time of repatriation or death. This net contribution is the key concept of the current study.
The study uses microdata from 2016 provided by Statistics Netherlands. These are very detailed, anonymized data of all 17 million Dutch residents, including about two million people with a first-generation migration background and almost two million people with a second- generation migration background.
It is rare to have a dataset of this quality, completeness, and size. The authors took 2016 data and studied 23 cost/benefit items. They then used detailed estimates of the future (post 2016) development of those 23 items used by the Netherlands Bureau for Economic Policy Analysis (CPB) in their population ageing studies.
The authors find that:
The rapid pace of immigration into the Netherlands has greatly increased the Dutch population, but not the sustainability of the Dutch welfare state. Of the 17 million Dutch inhabitants at the end of 2019, 13% were born abroad (first generation) and 11% were children of immigrants (second generation).
Currently, per capita expenditures on immigrants are significantly higher than on indigenous people in areas such as education, social security and benefits. Moreover, immigrants pay fewer taxes and social security premiums, which further lowers their net fiscal contribution. The current study looks back at past data as well as forecasts from Statistics Netherlands to calculate the total cost of immigration for the next two decades if policy remains unchanged.
Figure 2.3 gives the immigration history of the Netherlands in a snapshot.
Click for Full Text!