The immigrants' net tax contribution by country of origin
In several countries, immigration is currently one of the hottest political issues, particularly in the United States, Germany, Britain and France. The French online magazine Atlantico discusses economic implications of immigration for host countries.
Atlantico: What are the main findings of recent studies carried out in Denmark and the Netherlands on the net tax contribution of immigrants within the EU, depending on their country of origin?
Nicolas Pouvreau-Monti: There are traceable and significant differences between immigrants' contributions over the course of their lives. The net fiscal balance over a lifetime is based on several variables, notably the reason for immigration: labor immigration, family immigration or asylum. Labor immigration contributes more than asylum, which is divorced from any economic logic, depending on the level of qualification and also on the region of origin, which has a lot to do with the cultural distance between the society of origin and the host societies.
In the Dutch study, the authors, including Jan H. van de Beek, were able to establish that Western immigrants make a positive contribution over a lifetime of around €25,000 per person, while non-Western immigrants present an average annual cost, i.e. a total fiscal cost over a lifetime of around €270,000, with even lower maxima for specific classes in certain countries of origin. One of the really salient aspects concerns this gap according to region of origin, which seems to be a very important explanatory variable.
Jean-Paul Gourévitch: There's a real imbalance between the costs and benefits of immigration, but in terms of all the criteria. It's not just a question of tax and social contributions. It also concerns all the goods the country brings in terms of health, security and education.
These studies are based on extensive work and wide-ranging comparisons, and not on a simple comparison between what immigrants bring in fiscally and socially, and what they pay out fiscally and socially. The deficit is around 2 to 3.5% of the country's GDP. I myself arrived at this figure in a study I published for Contribuables associés. The only notable difference is that Denmark is beginning to reap the dividends of its policy of restricting immigration and of its choices linked to selective, work-based immigration. The Netherlands has not yet begun to reap the dividends of its policy.
Nicolas Pouvreau-Monti: The findings of these studies raise questions about the ability to choose immigration. There are variables that strongly differentiate economic integration trajectories, depending on the country of origin, the reason for entry and the level of qualification.
This calls for immigration to be considered like any other public policy, which should aim to minimize disadvantages and maximize benefits for society as a whole for which governments are responsible.
Today, the difficulty is that a large proportion of immigration is legal immigration, with no economic corollary or correlation with the needs of the host society. These questions also arise in France. The difficulty is that our country doesn't have such a fine, transparent statistical system.
Concerning the integration trajectories of immigrants and their descendants, in the first generation, there is a significant gap between the employment rate of immigrants from South-East Asia and the employment rate of immigrants from Algeria. The gap between the two categories is of the order of fifteen points higher in terms of employment rates. These differences in tax contributions have a great deal to do with the differences in levels of activity and qualifications, which are also difficulties encountered by France. This raises the question of the resources and policies needed to take action.
The net fiscal balance is a fairly interesting and relevant indicator for approaching all the dimensions of integration and measuring the adaptability of an immigrant population. It's not just about accounting. It also covers educational trajectories, integration into employment and thus into society.
Should these studies and the figures on immigrants' tax contributions lead political leaders in Europe to review their strategy and methods? Could France, in particular, learn from these studies?
Nicolas Pouvreau-Monti: The conclusions of these studies call into question the levers of action available to politicians to draw concrete political conclusions. Today, in our law, there is no possibility of privileging one type of immigration according to geographic origin, with the obvious exception of intra-EU immigration under a free movement regime.
These studies call into question the need to give ourselves the means to choose immigration, including on a geographical level. There is a principle of non-discrimination in our law which may make this measure difficult to apply. In the future, student or work-related immigration from South-East Asia, for example, could be encouraged. The employment rate of South-East Asian immigrants in France is almost 20 points higher than that of Algerian immigrants (75% vs. 56%). This also echoes the findings of Danish and Dutch studies.
Jean-Paul Gourévitch: Figures and studies show that selective immigration based on work, much less on family and not at all on asylum, has a positive impact. These results could lead countries to be much more restrictive when it comes to granting asylum and accepting refugees. By favoring labor immigration, this lowers the overall cost of immigration.
These studies show that Denmark, the Netherlands and France face exactly the same problems. But Denmark is ahead of us.
In view of France's budgetary difficulties, can the studies carried out in Denmark and the Netherlands point the way to reforming France's economic and financial strategy in relation to its migration policy?
Nicolas Pouvreau-Monti: The question of the fiscal impact of immigration is one of the major blind spots in today's debate on public finances in France. France is unique in that its immigrants are generally less integrated into the labor market and poorer than elsewhere in Europe. Immigration to France contributes less to public spending and consumes more. This reality is amplified as migratory flows themselves increase. Immigration has long-term structural budgetary repercussions. From the point of view of sound public finance management, this calls for a rethink of our immigration policy. The impact is quite obvious. The difficulty is that there is no single best estimate of the cost of immigration. No single figure is an absolute truth. When trying to assess the net cost or net fiscal balance of immigration, many criteria come into play. Immigration to France today is less integrated into the labor market and involves poorer people than elsewhere in Europe. This invites us to rethink our model.
(highlights by editor)
France is one of the developed countries that takes in the fewest immigrants. The proportion of immigrants in France is below the European average, according to Insee ( Institut national de la statistique et des études) France's 10.7% is well below Luxembourg's 50%, Malta's 28%, and around 20% in Germany, Austria, Belgium, Cyprus, Ireland and Sweden.
France is also at the bottom of the OECD rankings (New Window). In 2022, new immigrants to France represented 0.4% of the country's total population, compared with more than ten times that figure in Luxembourg (4.4%), Iceland (3.4%), New Zealand (3%), Canada (1.1%) and Germany (0.8%). In this ranking, France is just ahead of the United States, whose new immigrants will represent just 0.3% of the population in 2022.
Today, according to Insee, immigrants represent 10.7% of the population living in France. Half of them come from Africa, a third from Europe and almost 14% from Asia.
The proportion of immigrants in France's population has more than doubled in a century, almost tripling from 3.7% in 1921 to 10.7% in 2023. Some of these immigrants have or will have French nationality, so the proportion of foreigners in France is slightly different: foreigners will represent 8.2% of the total population in 2023, compared with 3.9% in 1921.
This increase is linked to three waves of immigration. The first took place in the 1920s, after the First World War, and the second during the Trente Glorieuses, after the Second World War. In both cases, France needed labor and went abroad to find it. After the first wave of immigration, many immigrants left again, but after the second, they stayed in France, where they had built up their lives, had children, etc. The third wave of immigration is more like the second wave of immigration.
The third wave of immigration is more recent, more progressive and more global. It is taking place against a backdrop of rising migration worldwide, linked in particular to the fact that it is much easier to travel today than it used to be, and to study in another country.