IDEAS home Printed from https://ideas.repec.org/p/dra/wpaper/201501.html
   My bibliography  Save this paper

The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark

Author

Listed:

Abstract

All over Europe, ageing populations threaten nations’ financial sustainability. In this paper we examine the potential of immigration to strengthen financial sustainability. We look at a particularly challenging case, namely that of Denmark, which has extensive tax-financed welfare programmes that provide a high social safety net. The analysis is based on a forecast for the entire Danish economy made using a dynamic computable general equilibrium model with overlapping generations. Net contributions to the public purse are presented both as cross-sectional figures for a long time horizon and as average individual life-cycle contributions. The main conclusion is that immigrants from richer countries have a positive fiscal impact, while immigrants from poorer countries have a large negative one. The negative effect is caused by both a weak labour market performance and early retirement in combination with the universal Danish welfare schemes.

Suggested Citation

  • 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.
    • Handle: RePEc:dra:wpaper:201501
    Note: IZA DP No. 8844
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp8844.pdf
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Poul Schou, 2006. "Immigration, integration and fiscal sustainability," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(4), pages 671-689, October.
    2. Christian Dustmann & Tommaso Frattini, 2014. "The Fiscal Effects of Immigration to the UK," Economic Journal, Royal Economic Society, vol. 124(580), pages 593-643, November.
    3. Joakim Ruist, 2014. "Free Immigration and Welfare Access: The Swedish Experience," Fiscal Studies, Institute for Fiscal Studies, vol. 35, pages 19-39, March.
    4. Hinte, Holger & Zimmermann, Klaus F., 2014. "Does the Calculation Hold? The Fiscal Balance of Migration to Denmark and Germany," IZA Policy Papers 87, Institute of Labor Economics (IZA).
    5. Wadensjo, Eskil, 2007. "Immigration and net transfers within the public sector in Denmark," European Journal of Political Economy, Elsevier, vol. 23(2), pages 472-485, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Torben M. Andersen, 2017. "The Danish labor market, 2000–2016," IZA World of Labor, Institute of Labor Economics (IZA), pages 404-404, November.
    2. Mikkel Christoffer Barslund & Marten von Werder, 2016. "Measuring dependency ratios using National Transfer Accounts," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 14(1), pages 155-186.
    3. Torben M. Andersen & Giuseppe Bertola & John Driffill & Harold James & Hans-Werner Sinn & Jan-Egbert Sturm & Branko Uroševic, 2016. "Chapter 4: Denmark: Too Good to Be True?," EEAG Report on the European Economy, CESifo, vol. 0, pages 85-98, February.
    4. Torben M. Andersen, 2019. "The Danish labor market, 2000–2018," IZA World of Labor, Institute of Labor Economics (IZA), pages 404-404, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. Mikkel Christoffer Barslund & Marten von Werder, 2016. "Measuring dependency ratios using National Transfer Accounts," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 14(1), pages 155-186.
    4. Carlo V. Fiorio & Tommaso Frattini & Andrea Riganti & Michael Christl, 2024. "Migration and public finances in the EU," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 635-684, June.
    5. Bedaso, Fenet, 2021. "The Labor Market Integration of Refugees and other Migrants in Germany," GLO Discussion Paper Series 884, Global Labor Organization (GLO).
    6. Anna Maria Mayda & Mine Z. Senses & Walter Steingress, 2023. "Immigration and Provision of Public Goods: Evidence at the Local Level in the U.S," Staff Working Papers 23-57, Bank of Canada.
    7. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    8. Michael Christl & Alain Bélanger & Alessandra Conte & Jacopo Mazza & Edlira Narazani, 2022. "Projecting the fiscal impact of immigration in the European Union," Fiscal Studies, John Wiley & Sons, vol. 43(4), pages 365-385, December.
    9. Christian Dustmann & Giovanni Facchini & Cora Signorotto, 2015. "Population, Migration, Ageing and Health: A Survey," RF Berlin - CReAM Discussion Paper Series 1518, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    10. Ian Preston, 2014. "The Effect of Immigration on Public Finances," Economic Journal, Royal Economic Society, vol. 124(580), pages 569-592, November.
    11. Zaiceva, A. & Zimmermann, K.F., 2016. "Migration and the Demographic Shift," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 119-177, Elsevier.
    12. Robert C. M. Beyer, 2016. "The Labor Market Performance of Immigrants in Germany," IMF Working Papers 2016/006, International Monetary Fund.
    13. 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).
    14. Sachs, Dominik & Colas, Mark, 2020. "The Indirect Fiscal Benefits of Low-Skilled Immigration," CEPR Discussion Papers 15325, C.E.P.R. Discussion Papers.
    15. Hugo Benítez-Silva & Eva Cárceles-Poveda & Selçuk Eren, 2011. "Effects of Legal and Unauthorized Immigration on the U.S. Social Security System," Working Papers wp250, University of Michigan, Michigan Retirement Research Center.
    16. Martin Kahanec & Martin Guzi, 2023. "Welfare Migration," Discussion Papers 65, Central European Labour Studies Institute (CELSI).
    17. Thiemo Fetzer & Stephan Kyburz, 2024. "Cohesive Institutions and Political Violence," The Review of Economics and Statistics, MIT Press, vol. 106(1), pages 133-150, January.
    18. Osea Giuntella & Fabrizio Mazzonna & Catia Nicodemo & Carlos Vargas-Silva, 2019. "Immigration and the reallocation of work health risks," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 1009-1042, July.
    19. Sascha O. Becker & Thiemo Fetzer, 2018. "Has Eastern European Migration Impacted UK-born Workers?," CAGE Online Working Paper Series 376, Competitive Advantage in the Global Economy (CAGE).
    20. Gerdes, Christer & Wadensjö, Eskil, 2008. "The Impact of Immigration on Election Outcomes in Danish Municipalities," IZA Discussion Papers 3586, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    immigration; public finances; forecasting; denmark;
    All these keywords.

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dra:wpaper:201501. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Stephensen (email available below). General contact details of provider: https://edirc.repec.org/data/dreamdk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.