Research reveals the positive impact of immigrants on the budgets of Western countries economy

A recent report published by the Wall Street Journal showed that the financial impact of immigration on Western countries is more complex than previously thought. Although immigrants can provide significant financial benefits, especially in societies with aging populations, the size of these benefits varies greatly based on the skill level of immigrants, with the highly skilled contributing more to government budgets than their low-skilled counterparts.

Numbers reveal the impact

According to a study by the UK’s Budget Responsibility Authority, on average, a migrant worker contributes a net amount of £225,000 (about $300,000) to the state coffers by age 85, compared to a negative contribution of £146,000 (about $195,000) per person. Resident in the United Kingdom.

However, a deeper analysis shows that high-income immigrants contribute a net £684,000 (about $911,000), while low-wage immigrants provide a net negative impact of £578,000 (about $770,000).

In the United States, the National Academy of Sciences estimated in 2017 that an immigrant who did not complete high school receives $109,000 more in government benefits than he pays in taxes over his lifetime. This figure highlights concerns about the financial impact of low-skilled migration.

A deeper look at the costs and benefits

According to a Wall Street Journal assessment, the financial impact of immigration goes beyond simple numbers related to the benefits an individual receives versus the taxes he pays.

Michael Clemens, professor of economics at George Mason University, points out that this simplified view does not reflect the full picture, and explained in an interview with the newspaper that “employers pay immigrants to work because this labor force adds value to their capital, and then taxes are imposed on their capital income.”

Adding this additional tax revenue, Clemens estimates that an immigrant without a high school diploma in the United States actually contributes a net $128,000 to the American treasury over his lifetime, rather than a deficit of $109,000.

In addition, low-skilled workers often support high-skilled workers in ways that enhance overall productivity. For example, services such as cleaning and childcare allow professionals such as doctors or engineers to work more efficiently.

According to a 2020 study by Dominik Sachs of the University of St. Gallen and Mark Kulas of the University of Oregon, these ripple effects add between $700 and $2,100 in additional financial benefits per low-skilled immigrant.

An immigrant who does not have a high school diploma in the United States actually contributes a net amount of $128,000 to the American treasury over his lifetime, instead of a deficit of $109,000.

Mixed picture

The Wall Street Journal confirms that the impact of immigration is not uniform in all countries. For example, a study in the Netherlands found that non-Western immigrants with a primary education or less cost the Dutch government a net €360,000 (about $400,000) over their lifetime, while immigrants with a master’s degree or higher make a positive net contribution of 130 thousand euros (about 144 thousand dollars).

In the United States, a study by the Congressional Budget Office (CBO) found that illegal immigration could provide a huge boost to the American economy, as it would generate financial benefits amounting to $897 billion over the next decade, which is equivalent to about $3,500 per adult. American.

Mixed opinions

Despite the economic potential, immigration policies remain controversial. “From a purely financial point of view, it is not beneficial to have work-related migration in low-paid jobs,” said Madeleine Sumption, director of the Migration Observatory at Oxford University.

This vision reflects the United Kingdom’s recent raising of the minimum salaries required for work visas in an attempt to limit the migration of low-wage workers.

Experts recommend that a more balanced approach targeting both high- and low-skilled migrants could deliver significant economic and financial benefits in the coming years.

For his part, Clemens points to missed opportunities by saying, “The number of $3,500 per American adult is a number that economists should be shouting from the rooftops,” referring to the Congressional Budget Office’s findings on the positive impact of immigration.

The Wall Street Journal report shows that current immigration laws in the United States, which have not seen serious reform in more than 3 decades, are still outdated in addressing today’s complex immigration challenges.

Experts recommend that a more balanced approach targeting both high- and low-skilled migrants could deliver significant economic and financial benefits in the coming years.