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Fiscal Implications of Immigration—A Net Present Value Calculation

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  • Kjetil Storesletten

Abstract

Focusing on the net fiscal effects, the gain from admitting immigrants is computed for a welfare state with large expenditures and a large tax burden (Sweden). Prices and behavior are held constant, which allows a detailed analysis of the effects of immigration. The present value of future tax revenues minus outlays is potentially large; USD 23,500 per young working‐age immigrant, but an average new immigrant represents a net government loss of USD 20,500. The dominant factors are employment rates and age. For young working‐age immigrants, the “break‐even” participation rate for which the gain would be zero is 60%, well below the empirical rate for this group.

Suggested Citation

  • Kjetil Storesletten, 2003. "Fiscal Implications of Immigration—A Net Present Value Calculation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 487-506, September.
  • Handle: RePEc:bla:scandj:v:105:y:2003:i:3:p:487-506
    DOI: 10.1111/1467-9442.t01-2-00009
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    1. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 300-323, April.
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    7. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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