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Does the Calculation Hold? The Fiscal Balance of Migration to Denmark and Germany

Author

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  • Hinte, Holger

    () (IZA)

  • Zimmermann, Klaus F.

    () (IZA and University of Bonn)

Abstract

Calculating the net fiscal effects of immigration not just for a fiscal year but over the lifespan of immigrant cohorts accentuates the assets and deficits in migration and integration policies and their long-term potential. The less national policies concentrate on a labor migrant selection process according to economic criteria, the higher the risk of generating economic losses or only a reduced surplus. A country comparison of net tax payments and generational accounts for migrants and natives reveals even more clearly that the right mix of migrants will give the best chance to maximize positive and sustainable net fiscal effects to the benefit of society. Similar socio-economic frameworks – as in the western welfare states of Denmark and Germany showcased in this paper – may still result in substantially different economic outcomes of migration. Traditional immigration countries with a long experience in selecting migrants are nonetheless confronted with the need to evaluate and adapt their policies. They may also learn from the results of net fiscal balancing.

Suggested Citation

  • Hinte, Holger & Zimmermann, Klaus F., 2014. "Does the Calculation Hold? The Fiscal Balance of Migration to Denmark and Germany," IZA Policy Papers 87, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izapps:pp87
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    References listed on IDEAS

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    1. Torun Österberg & Björn Gustafsson, 2001. "Immigrants and the public sector budget - accounting exercises for Sweden," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(4), pages 689-708.
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    3. John P. Haisken-DeNew & Felix Büchel & Gert G. Wagner, 1997. "Assimilation and Other Determinants of School Attainment in Germany: Do Immigrant Children Perform as Well as Germans?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(1), pages 169-179.
    4. Borjas, George J, 1987. "Self-Selection and the Earnings of Immigrants," American Economic Review, American Economic Association, vol. 77(4), pages 531-553, September.
    5. Hans-Werner Sinn & Gebhard Flaig & Martin Werding & Sonja Munz & Nicola Düll & Herbert Hofmann, 2001. "EU-Erweiterung und Arbeitskräftemigration : Wege zu einer schrittweisen Annäherung der Arbeitsmärkte," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 2.
    6. M. Dolores Collado & IÒigo Iturbe-Ormaetxe & Guadalupe Valera, 2004. "Quantifying the Impact of Immigration on the Spanish Welfare State," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(3), pages 335-353, May.
    7. Bonin, Holger, 2002. "Eine fiskalische Gesamtbilanz der Zuwanderung nach Deutschland," IZA Discussion Papers 516, Institute for the Study of Labor (IZA).
    8. Ather H. Akbari, 1989. "The Benefits of Immigrants to Canada: Evidence on Tax and Public Services," Canadian Public Policy, University of Toronto Press, vol. 15(4), pages 424-435, December.
    9. Svend E. Hougaard Jensen & Ulrik Nødgaard & Lars Haagen Pedersen, 2002. "Fiscal Sustainability and Generational Burden Sharing in Denmark," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 28, pages 43-60.
    10. Riphahn, Regina, 1999. "Immigrant Participation in Social Assistance Programs: Evidence from German Guestworkers," CEPR Discussion Papers 2318, C.E.P.R. Discussion Papers.
    11. Riphahn, Regina T, 2001. "Rational Poverty or Poor Rationality? The Take-Up Study of Social Assistance Benefits," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 379-398, September.
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    Cited by:

    1. repec:spr:jopoec:v:30:y:2017:i:3:d:10.1007_s00148-017-0636-1 is not listed on IDEAS
    2. Robert C. M. Beyer, 2017. "The Performance of Immigrants in the German Labor Market," SOEPpapers on Multidisciplinary Panel Data Research 892, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Marianne Frank Hansen & Marie Louise Schultz-Nielsen & Torben Tranæs, 2015. "The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark," DREAM Working Paper Series 201501, Danish Rational Economic Agents Model, DREAM.
    4. Marianne Frank Hansen & Marie Louise Schultz-Nielsen & Torben Tranæs, 2017. "The fiscal impact of immigration to welfare states of the Scandinavian type," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 925-952, July.
    5. Beyer, Robert, 2016. "The Labor Market Performance of Immigrants in Germany," Annual Conference 2016 (Augsburg): Demographic Change 145799, Verein für Socialpolitik / German Economic Association.
    6. Holger Hinte, 2014. "What determines the net fiscal effects of migration?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-78, June.
    7. repec:eee:hapoch:v1_119 is not listed on IDEAS
    8. Zaiceva, A. & Zimmermann, K.F., 2016. "Migration and the Demographic Shift," Handbook of the Economics of Population Aging, Elsevier.

    More about this item

    Keywords

    socio-economic effects of migration; generational accounting; immigrant selection; integration;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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