New study shows Europe’s fiscal winners and losers from EU immigration

22 March 2018

A large majority of European Economic Area (EEA) countries saw net fiscal benefits from EU immigration (people born in one EU country and living in another) between 2004 and 2015, the first major cross national analysis has shown.

However the analysis – undertaken by researchers at Sweden’s University of Uppsala, as part of a larger Oxford University project – also shows that the benefits were distributed unevenly. The findings create opportunities for policy-makers around Europe to compare approaches and outcomes, and potentially to refine and improve both national and EU-wide policies.

Switzerland, Cyprus, Norway and Belgium experienced the greatest net fiscal benefits, while Slovakia, Poland and Estonia experienced the greatest net fiscal cost of EU immigration. In all, more than two thirds of EEA countries saw net fiscal gains from EU immigration.

The findings come from the first major pan-EEA analysis of the fiscal impacts of European mobility. The research was undertaken by researchers at the University of Uppsala in Sweden, as part of the REMINDER (Role of European Mobility and its Impacts in Narratives, Debates and EU Reforms) Project – a major international programme of research run by the University of Oxford and funded by Horizon 2020, which is investigating the social and economic impacts of freedom of movement around the EU, and public discourse about the issue.

The vast majority of EEA countries – 21 out of 29 – saw positive net fiscal impacts during 2004-2015, receiving more in taxes and other contributions from EU migrants than they then spent in services (such as education, healthcare, infrastructure costs, welfare benefits and other costs) that were provided to EU migrants.

Report co-author Dr Rafael Ahlskog, a researcher at the University of Uppsala said: “Our analysis shows that in most countries in the EEA, EU citizens pay slightly more in taxes and other contributions to the state than they receive in services, meaning that they make a net fiscal contribution. This isn’t the case in all EEA countries, and a few – generally lower-income countries in Eastern Europe – end up with fiscal losses. The countries that have tended to see the biggest net benefits are countries that have a significant share of EU migrants in their populations.”

However, in almost all countries – whether the net fiscal impact was positive or negative – it represented a relatively small fraction of GDP – less than +/-0.4% in 24 out of 29 cases.

Dr Pär Nyman, co-author of the report and a researcher at the University of Uppsala, said: “The analysis is important because it provides a bigger picture allowing us to scrutinise the impacts of a common policy. It shows that in most cases – whether the effect is positive or negative – it is relatively limited and generally accounts for less than 0.4% of GDP. Nevertheless, this can still mean many billions in revenue – or, less commonly, costs – for a nation’s economy.

Dr Nyman added: “It is important to keep in mind, however, that these figures are all calculated based on a number of necessary assumptions, and should be taken as fairly robust pointers rather than the absolute truth.”

The analysis is consistent with other independent cross-national analyses of the fiscal impacts of immigration – notably work undertaken by the Organisation for Economic Co-operation and Development (OECD), though this did not look specifically at EU mobility. It also highlights the need for improved processes for collecting and comparing social and economic data from across the European Union.

Dr Carlos Vargas-Silva, Head of the REMINDER Project at the University of Oxford said: “The researchers have produced the first ever cross national analysis of the fiscal impacts of EU immigration. It shows clearly that the majority of EEA member states saw fiscal benefits, but was made considerably more difficult by the different ways that migration data is collected around the bloc. Hopefully greater efforts can be made at consistency in the future, which will allow better understanding of the impacts of migration.”

Press release REMINDER 

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