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Migrants cost European governments less than their native-born citizens do

Migrants are far less of a burden on the budget of European countries than is often thought. In many cases, they make a more positive contribution than the native-born population does. In a number of countries, migrants even make a net contribution to the public purse. This is the conclusion of research by economists from Leiden University.

The economists calculated the direct net contribution of migrants (from within and outside the EU) and the native-born population of 15 European member states from 2007 to 2018. They deducted government benefits and allowances, such as unemployment, retirement, and housing benefits, from taxes and contributions paid to the government. The results show that migrants cost most of the countries in the study less than the native-born population did.

Myth debunked

‘Little research has been conducted into the actual costs of immigration, even though it plays an important role in the social and political debate, especially now in the run-up to the European elections’, says economist Giacomo Boffi, who worked on the study. ‘This study debunks the populist myth that migrants are more of a burden on social security and the treasury than the native-born population. The opposite proves to be true in several countries.’

Age difference

One of the main reasons for this discrepancy is age. Immigrants in the EU are generally fairly young. The native-born population in the countries studied is quite a bit older, so many of these people receive pensions, and their reliance on pensions is growing over time as the average age increases. Furthermore, older migrants often have lower pensions because they have paid in less or accumulated them in foreign countries.

‘What we see is that the direct net contribution of both migrants and the natives plummeted during the financial crisis. More people were on benefits. After the crisis, however, the contribution of migrants returned to pre-crisis levels, whereas that of the native-born population lags behind as more and more of these people reach pension age’, Boffi explains.

More integrated, more taxes

An upward trend can be seen over the years in the net contribution of migrants in almost all the countries studied. This, says Boffi, could be because migrants become more integrated, better educated, earn more and consequently pay more tax. On the contrary, it could also be because they struggle to receive much for the welfare state, while they keep contributing to it. In Belgium, Greece, Italy, Luxembourg, and Portugal the direct net contribution of migrants is positive even. ‘Migrants contribute more to the governments of those countries than they cost.’

Economic importance of migrants

Migrants actively contribute to many European economies. Given the ageing of the native-born populations, their role is increasingly important. ‘From a financial-economic perspective, there is no migration crisis, quite the contrary. It would be wise for Europe to consider economic interest in its migration policy too.’

The 15 countries in the study are Austria, Belgium, the Czech Republic, Estonia, France, Germany, Greece, Ireland, Italy, Lithuania, Luxembourg, Portugal, Slovenia, Spain and Sweden.

See the reports The Net Fiscal Position of Migrants in Europe: Trends and Insights and Decomposing the Net Fiscal Position  of Migrants in Europe for more information.

This research is funded by the European Union. For more information about TransEuroWorkS, please contact Iraia Núñez Aguirre and Anna Lorenzini.

Text: Tim Senden

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