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Local Fiscal Effects of Immigration in Germany

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  • Simone Maxand
  • Hend Sallam

Abstract

We investigate the impact of immigration on public budgets using administrative data from German districts (Kreise). While previous literature suggests that the fiscal benefits of migration depend on government spending responses to immigration, the local-level effects in Germany remain relatively unexplored. Our study analyzes how immigration influences public spending, the provision of public goods, and public revenues from 2010 to 2019. Employing the post-double selection LASSO method for model identification and instrument generation, our results suggest that an increase in the foreign population proportion at the district level does not significantly affect public investment spending or collected tax revenues. Overall, along with 2011 results at the community level (Gemeinde), this research discusses the importance of distinguishing between different local levels, migration groups, and expenditure categories, when studying the gains and burdens of immigration in Germany.

Suggested Citation

  • Simone Maxand & Hend Sallam, 2024. "Local Fiscal Effects of Immigration in Germany," CESifo Working Paper Series 11162, CESifo.
    • Handle: RePEc:ces:ceswps:_11162
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    More about this item

    Keywords

    immigration; size of the government; welfare state; local budgets; spatial economy; public revenues; public spending;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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