Macroeconomic evidence suggests that asylum seekers are not a "burden" for Western European countries

Abstract

This paper aims to evaluate the economic and fiscal effects of inflows of asylum seekers into Western Europe from 1985 to 2015. It relies on an empirical methodology that is widely used to estimate the macroeconomic effects of structural shocks and policies. It shows that inflows of asylum seekers do not deteriorate host countries' economic performance or fiscal balance because the increase in public spending induced by asylum seekers is more than compensated for by an increase in tax revenues net of transfers. As asylum seekers become permanent residents, their macroeconomic impacts become positive.

Fig. 1. Economic and fiscal responses to migration shocks.

Year 0 stands for the year of the shock. We set the size of a shock on the net flow of migrants or the flow of asylum seekers to 1 incoming individual per thousand inhabitants. For per capita, GDP, spending, and net taxes, we expressed the responses in percentage change; for the unemployment rate and fiscal balance/GDP, the responses are in percentage point change. The solid line gives the estimated impulse responses. The dashed lines give the 90% confidence intervals that are generated by 5000 Monte Carlo repetitions.

Fig. 2. Migration responses to migration shocks.

Year 0 stands for the year of the shock. We set the size of a shock on the net flow of migrants or the flow of asylum seekers to 1 incoming individual per thousand inhabitants. We expressed the responses in per 1000 point change. The solid line gives the estimated impulse responses. The dashed lines give the 90% confidence intervals that are generated by 5000 Monte Carlo repetitions.