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The fiscal impact of EU immigration on the tax-financed welfare state: Testing the ‘welfare burden’ thesis

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  • Dorte Sindbjerg Martinsen
  • Gabriel Pons Rotger

Abstract

The European Union’s rules on free movement of people and the right to cross-border welfare are increasingly contested and have evoked one of the most salient debates in EU politics. The assumption that EU immigrants pose a net ‘welfare burden’ on the host member state has sounded loud and wide in recent years. This calls for an empirical test. In this article, we examine the fiscal impact of EU immigration on the universalistic, tax-financed welfare state of Denmark. We analyse EU citizens’ contribution to and consumption of welfare benefits between 2002 and 2013 on the basis of a unique dataset of administrative data, consisting of repeated cross sections of 100% of the EU population residing in Denmark. We find that EU immigrants made a significant positive net contribution to the Danish welfare state over the long time span examined and thus reject the ‘welfare burden’ thesis for the crucial case of Denmark.

Suggested Citation

  • Dorte Sindbjerg Martinsen & Gabriel Pons Rotger, 2017. "The fiscal impact of EU immigration on the tax-financed welfare state: Testing the ‘welfare burden’ thesis," European Union Politics, , vol. 18(4), pages 620-639, December.
    • Handle: RePEc:sae:eeupol:v:18:y:2017:i:4:p:620-639
    DOI: 10.1177/1465116517717340
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    References listed on IDEAS

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    Cited by:

    1. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr, 2018. "The Effects of Immigration in Developed Countries: Insights from Recent Economic Research," CEPII Policy Brief 2018-22, CEPII research center.
    2. Joxhe, Majlinda & Scaramozzino, Pasquale & Zanaj, Skerdilajda, 2021. "Fiscal Position of Immigrants in Europe: A Quantile Regression Approach," GLO Discussion Paper Series 758, Global Labor Organization (GLO).
    3. Anthony Edo & Lionel Ragot & Hillel Rapoport & Sulin Sardoschau & Andreas Steinmayr & Arthur Sweetman, 2020. "An introduction to the economics of immigration in OECD countries," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1365-1403, November.
    4. Łukasz Byra, 2023. "Two possible reasons behind the reluctance of low-skilled workers to migrate to generous welfare states," Working Papers 2023-24, Faculty of Economic Sciences, University of Warsaw.
    5. Guzi, Martin & Kahanec, Martin & Mýtna Kureková, Lucia, 2022. "The Impact of Immigration and Integration Policies On Immigrant-Native Labor Market Hierarchies," GLO Discussion Paper Series 1198, Global Labor Organization (GLO).
    6. Akane Bessho & Toru Terada & Makoto Yokohari, 2020. "Immigrants’ “Role Shift” for Sustainable Urban Communities: A Case Study of Toronto’s Multiethnic Community Farm," Sustainability, MDPI, vol. 12(19), pages 1-17, October.
    7. Michael A. Clemens, 2021. "The Fiscal Effect of Immigration: Reducing Bias in Influential Estimates," RF Berlin - CReAM Discussion Paper Series 2134, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    8. Martin Stepanek, 2022. "Sectoral Impacts of International Labour Migration and Population Ageing in the Czech Republic," Computational Economics, Springer;Society for Computational Economics, vol. 60(2), pages 375-400, August.
    9. Bonin, Holger & Krause-Pilatus, Annabelle & Rinne, Ulf & Brücker, Herbert, 2020. "Wirtschaftliche Effekte der EU-Arbeitskräftemobilität in den Ziel- und Herkunftsländern," IZA Research Reports 102, Institute of Labor Economics (IZA).
    10. Cecilia Bruzelius, 2020. "How EU Juridification shapes Constitutional Social Rights," Journal of Common Market Studies, Wiley Blackwell, vol. 58(6), pages 1488-1503, November.
    11. IGARASHI Akira & ONO Yoshikuni, 2020. "The Effects of Negative and Positive Information on Attitudes toward Immigration," Discussion papers 20023, Research Institute of Economy, Trade and Industry (RIETI).

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