The effect of immigration on public finances Immigration

effect of immigration on public finances

is one of the biggest problems that the most of the developed countries should
confront in their economies, and it has been a major problem for political
parties in Europe and USA, which over years have had different agenda about
discussing this problem. Illegal immigration is defined as a movement of people
from origin country to destination country, without having legal documents and
violating destination countries immigration laws. The main reasons that
stimulate people to immigrate are wars and economic problems. But how does
immigration affect public finances in the receiving countries? This is a
question that we cannot give an answer so easily. There are a lot of debates
between researchers if their effect is positive or negative. (Storesletten, 2003) in his study makes a
present value calculation for immigrants in host countries. For immigrants that
are between 20 and 30 the model predicts large possible gains from immigration,
about 23,430 dollars and for immigrants older than 50 the net cost is 128,857
dollars per immigrant. On average the net government loss per new immigrant is
20,500 dollars. According to (S.Fetzer,
immigration imposed a burden on each family in 1996 on each family about 1,178
dollars. Although in long run the effect that immigrants give in public
finances is positive. (Preston,
creates a model for a country with the assumption that has no immigrants and
then compares it with a country with immigrants. His main conclusions is that
the effect of immigration on public finances depend by the selection pressures
of immigrant composition, nature of tax and spending rules and the stage of the
business cycle at which effects are assessed. (Hansen, Schultz-Nielsen, & Tranaes, 2015) in their study about
the effect of immigration on Denmark conclude that western immigrants have a
positive impact on economy while non-western immigrants have a negative fiscal
impact. Immigrants can generate costs through costliness of provisions and
consumption of public services.

In my
opinion immigrants give a positive effect in the receiving country. The effect
that they have depends on immigrant`s age structure and labor market situation.
They can fill vacant positions in labor market. Here I can mention Germany that
is suffering by this problem and the rate of population with young age is
getting lower. Host countries, in this case Germany may have great interest by
receiving immigrants if they improve their abilities to work and offer to them
trainings for their professions. Today Japan is facing an economic and
demographic crisis. They have been an unfriendly country for immigrants and the
birth rate is getting lower. That’s why they have the oldest population in the
world. But I should notice that immigrants could work with lower salaries than
natives. This is good for the companies because they minimize their costs but
it’s bad for the native workers because they should reduce their pretend for
salaries, or the company will prefer to take an immigrant as employee. Although
I can say that the most of the immigrants fit in with the culture and
regulations of receiving countries.

I can
mention the case of Luxembourg, where the composition on the population is 48%
immigrants and 52% natives. Luxembourg has about 100 years that hosts
immigrants, first Italians, which came here as workers and then Portuguese, and
people from Balkan countries. Knowing that today Luxembourg is one of the most
developed countries in Europe can said that in long run this effect has been

(Nadadur, 2009)  points out benefits on immigration. According
to him, immigrants pay taxes for the children who are born in the country and
making them legal would impact positively on countries economic growth and
because of this reason. (J.Borjas, 1994) observing the way
that immigrants affect public finances in the United States notices that the
benefits from them are from 6-20 billion dollars for a year. And he predicts
that these gains would be increased considerably if the government applies an
immigration policy which will be attracted for high skilled immigrants.

Imagine a scenario where you are surrounded by hundreds of people of
all ethnicities, cultures and genders that pass by you. You don`t know them but
you just see that they are different from you. Therefore you cannot assume that
they will play a significant role in society or that their role will be bad.
They are just normal people trying to get from point A to B.

D. Roosevelt in one of his conferences has said ‘Remember, remember always,
that all of us are descended from immigrants and revolutionist”. Immigrants
didn’t come to steal native people’s job. They are just looking for a better
life where all should be allowed to live in harmony.