Health spending in Italy: the impact of immigrants

The welfare impact of immigration is a hot topic especially for countries at the external borders of the European Union. This paper studies how immigrants affect public health expenditure across Italian regions during the period 2003-2015. Identification strategy is based on shift{share instruments, which are also robust to pull factors that might attract immigrants in Italy and to internal migration of natives. We find that a 1 percentage point increase in immigrants over total population leads to a decrease in public health expenditure per capita by about 3.9% (i.e. around 70 euro per capita). This evidence is confirmed when focusing on needy immigrants from low income countries with less developed welfare systems. Among possible channels, we find no support for any crowding out effects from public to private health services by natives due to increasing immigration neither for the effect of entry barriers limiting the immigrants' reliance on public healthcare. Our results are driven by immigrants' demographic structure: foreigners are mostly males and younger workers that call for less health spending, according to a positive selection mechanism.