Fiscal effects of immigration depend on labour market outcomes

Abstract

Immigration will bring about a favourable change in the age structure, as the majority of immigrants are young adults. The effects on the public finances will above all depend on the impact of population growth on the costs of various publicly funded services and on the labour market performance of the immigrants. While population growth increases the costs of some publicly funded services, not all the costs will grow proportionally with the population. The average employment rate for immigrants is lower than for natives but it can be influenced. Immigration does not appear to weaken the employment prospects for the native population.