''Migration is just not a fiscal issue '' by Victoria Dendrinou

BREAKINGVIEWS-Migration is just not a fiscal issue - RTRS

13-Jun-2013 14:21

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own)

By Viktoria Dendrinou

LONDON, June 13 (Reuters Breakingviews) - Opponents of immigration into developed economies often claim that the influx of foreigners is bad for the economy. The newcomers, they say, take jobs, lower wages, squeeze housing and are drain on government finances. The OECD has done the world a service by debunking the last claim.

The club of mostly wealthy nations has measured how much immigrants pay in taxes and how much they take out in benefits. The data, taken from Europe, the United States, Canada and Australia, shows that immigrants’ direct fiscal impact is almost negligible. It is never more than two percent of GDP, and in most counties it doesn’t exceed 0.5 percent of GDP. In 19 of the 27 countries surveyed, the government gained, by this simple measure.

Of course, opponents to immigration will find ways to pick holes. They can point out that the study does not include indirect costs, such as schooling or health care - although it also doesn’t include indirect revenue such as sales taxes. And it’s true that governments are net payers when immigrants are predominantly unskilled or when they are let in to escape persecution in their native lands. But most rich countries let in a mix of people, including many skilled young workers, who are significant net contributors.

Immigrants typically arrive as young and healthy adults, so native governments have already paid for their schooling and medical expenses are low. That suggests a more complete study would show a clear net fiscal benefit. But from a government perspective, immigrants and natives are much more alike than different.

In any case, while the OECD study says that immigrants are becoming increasingly important for demographic reasons, its estimates don’t account for the greatest future fiscal benefit of the arrival of a steady stream of mostly young people: that they partially redress the demographic imbalance created by two generations of low birth rates. Without immigration, the governments’ pension problems, especially in Europe, would be far worse.

All in all, while this study isn’t the last word on the fiscal effects of immigration, it comes close. This is a non-issue. It’s time to argue about something else.