Will EU migrants pay their fair share of taxes?

The Initiative on Global Markets

As Europe grapples with the biggest influx of migrants and refugees since WWII, tensions between European Union member states persist over the economic case for accepting immigrants.

The Initiative on Global Markets at the University of Chicago Booth School of Business asked its European Economic Experts Panel to consider whether people who migrated to Europe between 2015 and 2018 are likely—over the next two decades—to contribute more in taxes paid than they receive in benefits and public services.

While a plurality of the economists expect that migrants will provide a net fiscal benefit, some of the panelists also warned of the need to integrate migrants into the labor market quickly.

Forty-six percent of economists agreed that migrants are likely to contribute more to the public purse than they receive in benefits and social services, while only 8 percent disagreed. Another 18 percent were uncertain.

Immigration and Government Budgets

“Being younger and typically better educated, their [the migrants’] fiscal contribution tends to be positive as suggested by recent research for the U.K.,” wrote Daniel Sturm of London School of Economics, who “agreed.” Oxford’s Peter Neary, who “strongly agreed,” added: “[o]n average, immigrants are younger, healthier and have fewer dependents than natives.”

Jan Pieter Krahnen of Goethe University Frankfurt “agreed” and wrote: “As [the] employment rate among migrants goes up over time, and much of taxation is indirect anyway, chances are that the statement comes true.”

Chicago Booth’s Christian Leuz, who is director of the European IGM Panel, was “uncertain” and cautioned: It is “too early to tell. Labor market outcomes are often worse for [a] long time. Demographics are [a] plus. Much depends on fast integration into [the] labor market.” Jean-Pierre Danthine of the Paris School of Economics “agreed’ and added: “To guarantee this outcome [contributing more in taxes versus benefits received] the States should invest generously in training and integrating the least qualified immigrants (refugees).”

The Chicago Booth European IGM Economic Experts Panel consists of 50 economists and top researchers from major universities and business schools in the United States and across Europe. The panel regularly explores the extent to which economists agree or disagree on major public policy issues facing the economy.

The panel’s goal is to explore views on some of the most important policy questions facing Europe—issues such as trade, migration, taxes, markets and competition—and to share these views directly with the public in a simple way.

Find more details about the full survey here.