metadata: authors: 0: author: Barbone,Luca
1: author: Bontch-Osmolovsky, Misha
2: author: Zaidi,Salman
count: Europe
docna: 0: docna: The foreign-born population in the European
            Union and its contribution to national tax and benefit
            systems : some insights from recent household survey data
docty: Policy Research Working Paper
subtopic: Labor & Employment Law,Tertiary Education,Educational Sciences,Social Development & Poverty,Employment and Unemployment
teratopic: Gender,Health, Nutrition and Population,Finance and Financial Sector Development
abstracts: cdata!: Despite the purported surge in internal
            migration following the 2004 enlargement of the European
            Union, data from the 2006 European Union Survey of Income
            and Living Conditions show that internal migrants are a
            relatively small share of the European Union's
            population. Depending on the exact definition used, only
            about 1 to 2 percent of the population of European Union-13
            countries (members prior to the 2004 enlargement, not
            including Germany and Luxembourg) were born in other
            European Union countries, while the corresponding share for
            European Union-4 countries (Poland, Hungary, Czech Republic,
            and Slovakia) is even lower. By contrast, about 6 percent of
            the population of European Union-13 countries was born
            outside the European Union. On examining the demographic and
            socio-economic background of the migrant population (both
            from within as well as outside the European Union), this
            paper finds that migrants tend to include a concentration of
            both low as well as highly educated workers. Both sets of
            migrants uniformly contribute to raising the working-age
            population of receiving countries. Using data on average
            incomes and taxes paid and benefits received by migrant and
            non-migrant households, the authors find no evidence to
            support the contention that migrant workers contribute much
            less in taxes than the native-born population, or consume
            significantly higher benefits. On the contrary, our
            calculations suggest that migrant workers make a net
            contribution of approximately 42 billion euros to the
            national tax and benefit systems of European Union-13 countries.
repnme: repnme: The foreign-born population in the European
            Union and its contribution to national tax and benefit
            systems : some insights from recent household survey data
display_title: The foreign-born population in the
            European Union and its contribution to national tax and
            benefit systems : some insights from recent household survey data
listing_relative_url: /research/2009/04/10445769/foreign-born-population-european-union-contribution-national-tax-benefit-systems-some-insights-recent-household-survey-data
topicv3: Tertiary Education m1326349 482,Social Insurance m1326950 751,Education m1327048 470,Migrant Workers m1504032 2729,Working Age Population m1504053 2749
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Gender,Health, Nutrition and Population,Finance and Financial Sector Development
no_of_pages: 28
author_keys: 0: author_key: 93449
1: author_key: 95623
model_extractions: WPS4899 Policy ReseaRch WoRking PaPeR 4899 The Foreign-born Population in the European Union and Its Contribution to National Tax and Benefit Systems Some Insights from Recent Household Survey Data _Luca Barbone Misha Bontch-Osmolovsky Salman Zaidi_ The World Bank Europe and Central Asia Region Poverty Reduction and Economic Management Unit April 2009
Policy ReseaRch WoRking PaPeR 4899

# **Abstract**

Despite the purported surge in internal migration following the 2004 enlargement of the European Union, data from the 2006 European Union Survey of Income and Living Conditions show that internal migrants are a relatively small share of the European Union’s population. Depending on the exact definition used, only about 1 to 2 percent of the population of European Union-13 countries (members prior to the 2004 enlargement, not including Germany and Luxembourg) were born in other European Union countries, while the corresponding share for European Union-4 countries (Poland, Hungary, Czech Republic, and Slovakia) is even lower. By contrast, about 6 percent of the population of European Union13 countries was born outside the European Union. On examining the demographic and socio-economic background of the migrant population (both from within as well as outside the European Union), this paper finds that migrants tend to include a concentration of both low as well as highly educated workers. Both sets of migrants uniformly contribute to raising the working-age population of receiving countries. Using data on average incomes and taxes paid and benefits received by migrant and non-migrant households, the authors find no evidence to support the contention that migrant workers contribute much less in taxes than the native-born population, or consume significantly higher benefits. On the contrary, our calculations suggest that migrant workers make a net contribution of approximately 42 billion euros to the national tax and benefit systems of European Union-13 countries.

This paper is a product of the Poverty Reduction and Economic Management Unit, Europe and Central Asia Region. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at szaidi5@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# **The Foreign-born Population in the European Union and Its Contribution to National Tax and Benefit Systems**

**Some Insights from Recent Household Survey Data**

**Luca Barbone, Misha Bontch-Osmolovsky, and Salman Zaidi***

> * World Bank, Washington DC. The paper was commissioned by the Czech Ministry of Labor and Social Welfare, and was presented at the EU Ministerial Conference “Strengthening EC Competitiveness – Potential of Migrants on the Labour Market” organized by the Czech Presidency of the Council of the EU in Prague, February 26th-27th, 2009. We would like to thank in particular Ms. Martina Michalcová and Ms. Martina Tomková, and the participants of the above-mentioned conference as well as numerous colleagues at the World Bank for helpful comments on earlier drafts. Nonetheless, the opinions and views presented here are those of the authors alone. Correspondence: Salman Zaidi, World Bank, 1818 H Street NW, Washington DC 20433, USA. E. mail: <u>szaidi5@worldbank.org. Phone: (202) 473 1976. Fax: (202) 522 2753.</u>
# **TABLE OF CONTENTS**

|TABLE OF CONTENTS........................................................................................................... 3|
|---|
|LIST OF TABLES....................................................................................................................... 3|
|1.<br>INTRODUCTION....................................................................................................................... 4|
|2.<br>DATA ANDMETHODOLOGICALAPPROACH............................................................................ 5|
|3.<br>PROFILE OFTHEEU MIGRANTPOPULATION........................................................................ 9|
|4.<br>CONTRIBUTIONS OFMIGRANTS TONATIONALTAX ANDBENEFITSYSTEMS....................... 13|
|5.<br>SELECTEDCOUNTRYCASES ANDCONCLUDINGOBSERVATIONS........................................ 18|
|ANNEX TABLES......................................................................................................................... 21|

# **LIST OF TABLES**

|Table 1: Number of Observations in the 2006 EU-SILC.................................................................. 6|
|---|
|Table 2: Population Breakdown by Derived Migration Status and Country of Residence.................. 7|
|Table 3: Breakdown of the Population by Age Group....................................................................... 9|
|Table 4: Breakdown of the Population by Highest Educational Attainment.................................... 10|
|Table 5: Breakdown of the Population by Employment Status........................................................ 11|
|Table 6: Breakdown of the Population by Employment Type......................................................... 12|
|Table 7: Average Personal Earned Income and Personal Income Tax............................................. 14|
|Table 8: Average Benefits Receipts................................................................................................. 15|
|Table 9: Average Household Demographic Composition............................................................... 16|
|Table 10: Total Household Earnings, Taxes Paid, and Benefits Received........................................ 17|
|Table 11: Breakdown of the Population by Country and Age Group.............................................. 21|
|Table 12: Breakdown of the Population by Country and Highest Educational Attainment.............. 22|
|Table 13: Breakdown of Population by Occupational Status........................................................... 24|
|Table 14: Average Benefits Collected by Working-Age Individuals................................................. 25|
|Table 15: Average Benefits Collected by Individuals 16 Years and Older........................................ 26|
|Figure 1: Breakdown of Population by Place of Birth....................................................................... 8|
|Figure 2: Composition of the Migrant Population by Place of Birth.................................................. 8|
|Figure 3: Net Taxes Paid: EU13 Countries (Migrant and Non-Migrant Populations)...................... 18|
|Figure 4: Net Taxes Paid: Selected Countries (Migrant and Non-Migrant Populations)................... 19|
# **1. INTRODUCTION**

In recent years, the rise in remittance flows from migrant workers to their home countries has been one of the most important sources of resource transfers for developing countries. However, despite the evident support for improving living conditions in poorer countries, international migration continues to be a contentious public policy issue in richer countries. Among the various reasons why this is so is the negative perception that migrants impose a disproportionately large fiscal burden on receiving countries,<sup>1</sup> because they consume a relatively larger share of social benefits and services (because they are more likely to be unemployed or have larger families, or strive hard to claim the maximum possible benefits that they possibly can, etc.) and make relatively small contributions to tax revenues (e.g. because of higher tax evasion, greater tendency to work in the informal economy, etc.) than the country’s non-migrant population. The main objective of this paper is to ascertain whether evidence derived from household survey data on tax payments and benefits consumption of migrant in various countries of the European Union support this perception.

The paper is organized as follows: Section 2 provides a brief description of the 2006 European Union Survey of Income and Living Conditions (EU-SILC), the primary data set used in the paper, including definitions of key variables used in the analysis as well as a summary of the proxy criteria used to identify the various EU “migrant population” sub-groups. In the remainder of the paper, the analysis focuses on five main sub-groups of interest for the main individual EU countries and other country sub-groups (in particular, the EU13 and EU4)<sup>2</sup> : (i) the native-born population, (ii) citizens born in other EU countries, (iii) citizens born outside the EU, (iv) non-citizens that are citizens of other EU countries, and, finally, (v) non-citizens that are citizens of other non-EU countries. Section 3 provides a profile of these five population sub-groups, focusing in particular on how the relative sizes of these groups and other key characteristics (e.g. demographic composition, educational background and nature of employment, etc.) vary across the main EU countries and other country sub-groups of interest noted above.

Section 4 analyzes the contributions of migrants to the national tax and benefits systems of the various EU countries where they currently live, and in particular shows that in EU13 countries as a group, there is no evidence to support the contention that migrant workers contribute much less in taxes than the native-born population, or consume significantly higher benefits. On the contrary, our calculations suggest that migrants make significant net positive contributions to the national tax and benefits systems of EU13 countries. Since the analysis also reveals considerable heterogeneity across countries, Section 5 discusses the differing experiences of Austria, Belgium, Spain, Ireland, Sweden, and the United Kingdom with regard to the differing net contributions of the various migrant subgroups. This section also concludes by summarizing the key findings of the paper, as well as discussing the main factors that help explain the differing situation across individual EU countries. In particular, the section shows how differing receipts of retirement benefits is the main reason that explains why migrants consume significantly lower benefits compared to the native-born population.

> 1 See, for example, Zsolt Gal: The Paradox of European Immigration—Limited Access to the Labour Markets, Open Doors to the Swedish Table of Welfare Systems. National Bank of Poland’s Journal on Economics and Finance: “Migration, Labour Market and Economic Growth in Europe after Enlargement”. Warsaw 8-9 December, 2008.

> 2 The EU13 group comprises Austria, Belgium, Denmark, Spain, Finland, France, Greece, Ireland, Italy, Netherlands, Portugal, Sweden, and the United Kingdom, while the EU4 group comprises Poland, Czech Republic, Hungary, and Slovakia. The rationale for focusing on these specific country groups is provided later in the paper.

4
# **2. DATA AND METHODOLOGICAL APPROACH**

This paper utilizes household survey data from the 2006 European Union Survey of Income and Living Conditions (EU-SILC). The EU-SILC is an instrument aiming at collecting timely and comparable micro data on income poverty and social exclusion in countries of the European Union. This instrument is anchored in the European Statistical System, and aims to provide two types of data: (i) cross-sectional data pertaining to a given time or a certain time period with variables on income, poverty, social exclusion and other living conditions, and (ii) longitudinal data pertaining to individual-level changes over time, observed periodically typically over a four years period. The reference population of EU-SILC is all private households and their current members residing in the territory of the member states at the time of data collection. Persons living in collective households and in institutions are generally excluded from the target population, but in general the excluded population in each country is no more than 2 percent of the total national population.

## **Box 1: Definitions of Key EU-SILC Variables Used in the Analysis**

**Total disposable household income** is the sum for all household members of gross personal income components (including gross employee cash or near cash income, gross non-cash employee income, gross cash benefits or losses from self-employment, value of goods produced for own consumption, unemployment benefits, old-age benefits, survivor benefits, sickness benefits, disability benefits, and education-related allowances) plus gross income components at the household level (including imputed rent, income from rental of a property or land, family/children related allowances, social exclusion not elsewhere classified, housing allowances, regular inter-household cash transfers received, interest dividends, profit from capital investments in unincorporated business, income received by people aged under 16) minus interest paid on mortgage, regular taxes on wealth, regular inter-household cash transfers paid, tax on income and social insurance contributions (including tax adjustments-repayment/receipt on income, income tax at source, and social insurance contributions).

**Per capita disposable income** is computed as total disposable household income / household size.

**Benefits** include unemployment, old-age, survivors, sickness, disability, education, family benefits, other social exclusion, and housing allowances.

**Taxes** include regular taxes on wealth, taxes on income and social insurance contributions, as well as employer’s social contributions.

Four main types of data are gathered in EU-SILC: (i) variables measured at the household level; (ii) information on household size and composition and basic characteristics of household members; (iii) income and other more complex variables termed ‘basic variables’ (education, basic labor information and second job) measured at the personal level, but aggregated to construct householdlevel variables; and (iv) variables collected and analyzed at the person-level termed ‘the detailed variables’ (health, access to health care, detailed labor information, activity history and calendar of activities’). The main EU-SILC variables used in our analysis are per capita disposable income as well as data on taxes and benefits (Box 1). Further details pertaining to the specific variables included in the micro data sets, as well as the specific sample selection procedures followed in each country covered in the survey, can be found in the EU-SILC user database description.<sup>3</sup> All 25 EU member countries were covered in the 2006 EU-SILC round.<sup>4</sup> In addition to several key variables of interest noted above, the EU-SILC dataset also includes two variables of particular interest for our analysis:

> 3 UDB description ver 2005-4 from 15-09-07; <u>UDB description ver 2006-1 from 01-03-08, Eurostat, Directorate F: Social</u> Statistics and Information Society, Unit F-3: Living conditions and social protection statistics, Luxembourg.

> 4 Bulgaria and Romania were not yet members of the European Union in 2006. In addition, Germany and Malta were not part of the database we received from Eurostat, so are excluded from the analysis.

5
(i) country of birth, and (ii) country of citizenship, either of which could potentially be used as a proxy for migrant status.

We start first by presenting in Table 1 the distribution of individuals aged 16 years and older interviewed in each EU country by country of birth and citizenship. As the table shows, the sample of observations in each country is in general fairly large, thereby permitting results derived from the dataset to be presented at a fairly high level of disaggregation. However, in much of the analysis presented in the paper, we focus mainly on presenting and comparing results for two main groups of interest: (i) the EU13 (i.e. EU 15 member countries prior to the 2004 enlargement, minus Germany and Luxemburg), and (ii) the EU4 (Poland, Hungary, Czech Republic, and Slovakia).<sup>5</sup> Wherever possible (and of special interest), we also present results for some individual EU countries.

**Table 1: Number of Observations in the 2006 EU-SILC**

||**1.**<br>|**Total numbe**<br>**Country of Birth**<br>|**r of observatio**<br> <br>|**ns(individuals**<br>**2. Cou**|**aged 16years a**<br>**ntry of Citizens**<br>|**nd older)**<br>**hip**<br>||
|---|---|---|---|---|---|---|---|
|**COUNTRY**|**Within**<br>**Country**|**Other EU**<br>**country**|**Non-EU**<br>**country**|**Country**|**Other EU**<br>**country**|**Non-EU**<br>**country**|**TOTAL**|
|Austria|10,477|510|1,023|11,163|228|584|12,010|
|Belgium|9,833|702|772|10,382|614|303|11,307|
|Cyprus|7,670|420|667|7,796|516|445|8,757|
|Czech Republic|14,283|413|160|14,704|83|69|14,856|
|Denmark|10,822|160|385|11,086|91|190|11,367|
|Estonia|11,190|-|1,814|11,399|-|1,608|13,004|
|Spain|26,600|274|1,265|27,070|159|910|28,139|
|Finland|21,527|250|333|21,789|146|195|22,110|
|France|17,309|652|1,540|18,382|377|621|19,501|
|Greece|11,789|134|683|12,071|71|463|12,606|
|Hungary|16,030|117|353|16,432|14|69|16,500|
|Ireland|10,326|861|291|10,853|424|201|11,478|
|Italy|43,678|551|1,701|44,833|131|1,011|45,930|
|Lithuania|9,562|37|620|10,123|14|82|10,219|
|Luxemburg|4,028|3,127|654|4,044|3,378|392|7,809|
|Latvia|7,527|-|1,544|7,344|-|1,727|9,071|
|Netherlands|16,370|246|637|17,041|125|73|17,253|
|Poland|34,417|199|277|34,847|16|30|34,893|
|Portugal|9,895|103|150|9,968|40|140|10,148|
|Sweden|11,859|597|1,019|13,014|254|207|13,475|
|Slovenia|24,670|-|2,265|-|-|-|26,935|
|Slovakia|12,411|179|40|12,590|27|13|12,630|
|United Kingdom|16,810|192|1,552|17,717|179|656|18,554|
|**Total**|**359,083**|**9,724**|**19,745**|**344,648**|**6,887**|**9,989**|**388,552**|

The “country of citizenship” and “country of birth” can be seen to represent relatively narrow and broad bands respectively defining migrant status: almost all would agree that foreign nationals currently in the country are indeed migrants, with the possibility that many recent migrants have by now acquired citizenship of the country in which they are currently living, so are therefore missed using the relatively narrow “country of citizenship” criterion. On the other hand, while many foreign-

> 5 **EU4 countries:** Of the EU10 countries (i.e. EU member countries that joined during the 2004 enlargement), Cyprus is excluded on account of it’s relatively small size, while Estonia, Latvia, Lithuania, and Slovenia are excluded because prior to the breakup of the Soviet Union, all these countries were part of larger political entities, which renders problematic the use of country of birth and citizenship as the main criteria for forming our five main analytic groups. **EU13 countries:** Data for Germany was excluded from the EU-SILC data set we received from Eurostat. In addition, we also exclude Luxemburg from the analysis because we suspect that migrants in Luxemburg are fundamentally different from migrants in the other EU countries. As Table 1 shows, the share of migrants in Luxemburg is several times higher than in other EU countries.

6
born people may indeed have been migrants at some stage, the actual move to the present country may have taken place quite some time back, with the result that many classified as migrants using the relatively broad “country of birth” criterion do not in fact conform to the notion many people have in mind when they think of migrants. After considering various possible alternatives, we used the information from both sets of variables to divide the sample population into five main groups of interest: (i) native-born population, (ii) citizens born in other EU countries, (iii) citizens born outside the EU, (iv) non-citizens from other EU countries, and (v) non-citizens born outside the EU.

The distribution of the EU-SILC sample into these five main groups is presented in Table 2. Using a relatively narrow definition of migrants—classifying as migrants all non-citizens in any given country—migrants comprise less than 5 percent of the population of the EU13 (less in the EU4). Even using a relatively broad definition—classifying as migrants all those (i.e. regardless of their citizenship) born outside the country where they currently reside—migrants constitute less than 10 percent of the population of EU13 countries. By contrast, the foreign-born population constitutes about 13 percent of the total population of the United States (i.e. not including the much larger share of internal migrants within the country).<sup>6</sup> Overall, about 2 percent and 9 percent of the population of EU4 and EU13 countries respectively were born outside their current country of residence. As illustrated in Figure 1, this share varies considerably across individual EU countries, from more than 15 percent in Austria to less than 2 percent in Poland and Slovakia.

**Table 2: Population Breakdown by Derived Migration Status and Country of Residence**

|||**Percent of**<br>**1.**<br>|**thepopulation**<br>**2.**<br>|**16+years:**<br>**3.**<br>|**4.**<br>|
|---|---|---|---|---|---|
|**COUNTRY**|**Native-born**<br>**Population**|**Citizens born in**<br>**other**<br>**EU countries**|**Citizens**<br>**born outside**<br>**the EU**|**Non-citizens**<br>**from other EU**<br>**countries**|**Non-citizens**<br>**born outside**<br>**the EU**|
|Austria|85|3|4|2|6|
|Belgium|88|2|3|4|3|
|Denmark|95|0|1|1|3|
|Spain|95|1|1|1|3|
|Finland|97|1|1|0|1|
|France|88|2|4|2|3|
|Greece|93|1|2|0|4|
|Ireland|89|4|1|4|2|
|Italy|94|1|1|0|4|
|Netherlands|94|1|4|1|1|
|Portugal|97|1|1|0|1|
|Sweden<br>|88|3|5|2|2|
|United Kingdom|89|0|6|1|4|
|**Total EU 13 countries**|**91**|**1**|**3**|**1**|**3**|
|Czech Republic|96|2|1|0.5|0.7|
|Hungary|97|1|2|0.1|0.5|
|Slovakia|98|1|0.3|0.2|0.1|
|Poland|99|1|1|0.0|0.1|
|**Total EU 4 countries**|**98**|**1**|**1**|**0.1**|**0.3**|

**Note:** Totals across rows may not add to 100 because of rounding.

> 6 US Census Bureau: 2006 American Community Survey, as cited on www.migrationinformation.org.

7
**Figure 1: Breakdown of Population by Place of Birth**

<!-- Start of picture text --> 100%<br>95%<br>90%<br>85%<br>80%<br>Born in country Born outside the country<br>Share of the population (%)<br>Austria Belgium France Sweden Ireland UK Greece Italy Netherlands Denmark Spain Czech Rep. Finland Portugal Hungary Slovakia Poland EU13 EU4<br><!-- End of picture text --> Within the group of migrants thus broadly defined, it is instructive to look at the breakdown of migrants by place of birth (Figure 2). Migrants (broadly defined as those born outside their current country of residence), born outside the EU outnumber those born within the EU by roughly 3 to 1 in EU 13 countries (i.e. sum of yellow bars 2 and 4 vs. sum of blue bars 1 and 3). Thus, despite the purported rise in numbers post-2004, the scale of internal migration in the EU remains quite small.

**Figure 2: Composition of the Migrant Population by Place of Birth**

<!-- Start of picture text --> Ireland Greece Netherlands<br><!-- End of picture text --> <!-- Start of picture text --> Italy Spain Denmark<br><!-- End of picture text --> <!-- Start of picture text --> Czech Rep. Portugal<br><!-- End of picture text --> <!-- Start of picture text --> Hungary Slovakia<br><!-- End of picture text --> <!-- Start of picture text --> Poland EU13<br><!-- End of picture text --> <!-- Start of picture text --> EU4<br><!-- End of picture text --> <!-- Start of picture text -->
1. Citizens born in other EU countries 2. Citizens born outside the EU<br>3. Non-citizens from other EU countries 4. Non-citizens born outside the EU<br><!-- End of picture text -->

8
As illustrated in Figure 2, the distribution of migrants by country of origin varies considerably across individual EU countries: Austria, United Kingdom, and France have the largest proportion of migrant population born outside the EU, followed by Sweden and Belgium. At the other end of the spectrum, countries where migrants from other EU countries constitute a sizeable share of the population include Ireland (over 8 percent), Belgium (6 percent), Sweden and Austria (around 5 percent). Ireland and Slovakia are the only EU countries where the number of migrants born in other EU countries exceeds the number of migrants from outside the EU.<sup>7</sup>

# **3. PROFILE OF THE EU MIGRANT POPULATION**

**Age and Demographic Composition:** Countries in Eastern Europe and the former Soviet Union are experiencing rapidly aging populations, a phenomenon posing significant economic and social challenges due to rising health care expenditures and public pension payments to the elderly.<sup>8</sup> EU countries are no different in this respect, in that a rapid shift is currently underway in the age structure of their populations: presently every sixth EU citizen is over 65 years of age; this share is projected to rise to one-fifth by 2020, and as high as one-fourth to one-third by 2050.<sup>9</sup> While mass immigration may not be a viable policy tool to reverse the trend of the aging EU population, it is nonetheless informative to compare the demographic composition of EU migrant and non-migrant groups. The 2006 EU-SILC data clearly illustrate the aging challenge confronting both EU4 and E13 countries: 29 percent and 35 percent respectively of the native-born populations aged 16+ years are 56 years or older in these country groups (Table 3). Non-citizens born outside the EU (i.e. group 4) help raise the stock of working-age population in both EU13 and EU4 countries, with more than four-fifths (88 percent and 92 percent respectively) falling in the 16-55 yr age groups.

**Table 3: Breakdown of the Population by Age Group**

|||**Native-born**<br>**Population**|**1.**<br>**Citizens born**<br>**in other**<br>**EU countries**|**2.**<br>**Citizens born**<br>**outside the**<br>**EU**|**3.**<br>**Non-citizens**<br>**from other EU**<br>**countries**|**4.**<br>**Non-citizens**<br>**born outside**<br>**the EU**|
|---|---|---|---|---|---|---|
|**EU 13**|||||||
||16-20 years|6|4|4|2|5|
||21-55 years|59|52|65|64|83|
||56+ years|35|44|31|34|12|
||Total|100|100|100|100|100|
|**EU 4**|||||||
||16-20 years|7|1|2|6|4|
||21-55 years|63|26|25|69|88|
||56+ years|29|73|73|25|9|
||Total|100|100|100|100|100|

 In **Austria** and **Belgium,** citizens born outside the EU as well as all non-citizen migrants (i.e. groups 2-4) tend to be younger than the rest of the population (Annex Table 11).

> 7 Given the small number of observations in some cells of Table 2 (and therefore relatively large standard errors of the resultant estimates), the remainder of the paper presents country-level breakdowns for the larger EU countries only.

> 8 See Chawla, M. Gordon Betcherman, and Arup Banerji (2007): From Red to Gray: The Third Transition of Aging Populations in Eastern Europe and the former Soviet Union, World Bank, Washington DC.

> 9 “Economic Migration, Social Cohesion and Development: Towards and Integrated Approach”. Thematic report prepared for the 8th Council of Europe Conference of Ministers Responsible for Migration Affairs, Kyiv, September 2008.

9
- In **Spain** , **Ireland** , and **Italy** , all migrants (i.e. groups 1-4) tend to be younger than the nativeborn population.

- In **France** , by contrast, only non-citizens born outside the EU (i.e. group 4) tend to be younger than the rest of the country’s residents.

- Finally, in **Sweden** and the **United Kingdom** , migrants from outside the EU (both citizen and non-citizens) tend to be younger than the rest of the country’s population.

**Educational Background:** Do migrant workers have more or less education than the nativeborn population? It turns out there is no simple answer to this question, but rather that it depends on a number of factors, such as place of origin, migrant sub-group, place of residence, etc. In EU13 countries overall, citizens born in other EU countries as well as in countries outside the EU have a fairly similar educational attainment profile as the native-born population, the exception being that citizens that were born outside the EU are somewhat more likely to have tertiary education (and correspondingly are somewhat less likely to have primary education or below (Table 4).

**Table 4: Breakdown of the Population by Highest Educational Attainment**

|**Population (percent)**<br>**with level of education**<br>**indicated**|**Native-born**<br>**Population**|**1.**<br>**Citizens born**<br>**in other**<br>**EU countries**|**2.**<br>**Citizens born**<br>**outside the**<br>**EU**|**3.**<br>**Non-citizens**<br>**from other**<br>**EU countries**|**4.**<br>**Non-citizens**<br>**born outside**<br>**EU**|
|---|---|---|---|---|---|
|**EU 13**||||||
|Primary and below|24|26|16|32|24|
|Lower secondary|21|19|21|12|21|
|Upper secondary|31|33|30|25|26|
|Post secondary|3|4|5|4|6|
|Tertiary|21|19|28|27|23|
|Total|100|100|100|100|100|
|**EU 4**||||||
|Primary and below|14|20|28|3|2|
|Lower secondary|6|19|8|16|15|
|Upper secondary|62|51|47|59|61|
|Post secondary|3|1|2|3|1|
|Tertiary|14|10|15|20|22|
|Total|100|100|100|100|100|

Non-citizens born in other EU countries, by contrast, have a disproportionately high share of people with either primary or lower education, or with tertiary and higher education (i.e. a more spiked bimodal distribution as compared to other groups). In EU4 countries, by contrast, the foreign-born citizens group has a higher share of people with relatively low educational attainment, while the foreign-born non-citizens groups have a relatively higher share of those with tertiary education as compared to other sub-groups. However, this aggregate picture for the EU13 overall described above conceals considerable diversity at the level of each individual country, as described below (see Annex Table 12):

- In **Austria,** migrants born outside the EU (both citizens as well as non-citizens) tend to have lower educational attainment than the rest of the population; by contrast, those from other EU

10
countries (once again both citizens as well as non-citizens) are more likely to have tertiary education than their compatriots born elsewhere.

- In **Belgium** , non-citizen migrants born outside the EU have a higher share of those with primary/less education as well as tertiary education as compared to other migrant groups (i.e. a more spiked bimodal distribution).

- In **Spain** , the native-born population has a higher share of those with primary or lower education compared to the rest of the population—the reverse is true in **France** .

- In **Ireland** , the non-native born population is disproportionately likely to have tertiary education, as are **United Kingdom** residents born outside the EU (both citizens and non-citizens).

**Employment:** Turning next to the employment status of different population sub-groups, the native born population in EU13 countries tends to be slightly more likely than migrants (i.e. groups 1-4) to be in full time employment (Table 5).

**Table 5: Breakdown of the Population by Employment Status**

|**A**|**ustria**|**Belgium**|**Spain**|**France**|**Greece**|**Ireland**|**Italy**|**Sweden**|**UK**|**EU 4**|**EU 13**|
|---|---|---|---|---|---|---|---|---|---|---|---|
|**Native-born Population**||||||||||||
|Working full time|63|62|63|67|64|57|61|69|64|65|63|
|Working part-time|14|17|7|13|6|15|8|15|16|4|12|
|Unemployed|5|7|9|7|9|5|8|3|3|12|6|
|<br>Other|18|14|21|13|21|23|23|13|17|19|19|
|Total|100|100|100|100|100|100|100|100|100|100|100|
|**1. Citizens born in other EU countr**|**ies**|||||||||||
|Working full time|69|46|62|67|61|57|50|73|**...**|63|59|
|Working part-time|7|18|7|13|3|14|7|13|**...**|3|12|
|Unemployed|8|10|8|1|12|7|11|1|**...**|18|6|
|Other|16|26|23|19|24|22|32|13|**...**|16|23|
|Total|100|100|100|100|100|100|100|100|**...**|100|100|
|**2. Citizens born outside the EU**||||||||||||
|Working full time|58|45|66|58|59|**...**|58|56|58|70|56|
|Working part-time|11|13|9|14|9|**...**|5|14|16|5|14|
|Unemployed|12|19|12|11|14|**...**|9|9|2|8|9|
|Other|19|23|13|17|18|**...**|28|21|24|17|21|
|Total|100|100|100|100|100|**...**|100|100|100|100|100|
|**3. Non-citizens from other EU cou**|**ntries**|||||||||||
|Working full time|51|56|64|70|39|69|51|69|59|66|62|
|Working part-time|13|11|7|12|7|9|7|15|15|4|12|
|Unemployed|9|11|9|4|1|5|8|6|12|8|7|
|Other|27|22|20|14|53|17|34|10|14|22|19|
|Total|100|100|100|100|100|100|100|100|100|100|100|
|**4. Non-citizens born outside the E**|**U**|||||||||||
|Working full time|52|41|66|39|65|46|64|40|55|71|55|
|<br>Working part-time|11|11|11|14|9|10|9|10|13|5|11|
|<br>Unemployed|13|11|10|18|4|11|9|17|6|9|10|
|<br>Other|24|37|13|29|22|33|18|33|26|15|24|
|Total|100|100|100|100|100|100|100|100|100|100|100|

Note: computed for population aged 21-55. **...** too few observations to permit reliable estimates to be derived.

- In **Austria** , **Belgium** , and **Italy** , migrants tend generally to be less likely to be in full-time employment and more likely to be unemployed than the native-born population.

- In **Spain** and **EU4 countries** , the employment profiles of all population sub-groups (i.e. migrants and non-migrants) tend to be quite similar.

11
- In **France** and **Sweden** , non-citizens from outside the EU stand out compared to other population sub-groups in having a relatively poor employment profile (i.e. low share of full-time employment, high share of unemployed) compared to other population groups.

- In the **United Kingdom** , migrants are much less likely to be in full-time employment than the native-born population; while non-citizens are more likely to be unemployed than other groups, this is not necessarily so for citizens born in other EU countries or outside the EU.

Do working migrants and non-migrant groups have different occupation and employment types? Table 6 shows that in EU13 countries, migrants generally tend to be employees rather than selfemployed (in particular non-citizens outside EU). In addition, migrant workers tend to work in bluecollar occupations like construction, mining and salesmen (Annex Table 13), whereas native-born workers have a higher fraction of white-collar jobs. Sweden stands out as an exception: there fraction of self-employed is higher among migrant workers than among the native born workers. In Spain, we observe a higher share of self-employed workers that have own employees among the non-citizen migrants from within the EU than among the native-born population. Among the EU4 countries there is a substantially higher fraction of family workers among the fourth group of migrants.

**Table 6: Breakdown of the Population by Employment Type**

|**Austria**|**Belgium**|**Spain**|**France**|**Greece**|**Ireland**|**Italy**|**Sweden**|**UK**|**EU 4**|**EU13**|
|---|---|---|---|---|---|---|---|---|---|---|
|**Native-born population**|||||||||||
|self-employed with employees<br>7|3|4|3|5|5|6|4|2|3|4|
|self-employed w/o employees<br>4|8|10|5|22|10|16|5|8|12|10|
|employee<br>89|89|85|92|67|85|76|91|89|83|86|
|family worker<br>0|0|0|0|5|0|2|0|0|2|1|
|Total<br>100|100|100|100|100|100|100|100|100|100|100|
|**1. Citizens born in other EU countries**|||||||||||
|self-employed with employees<br>9|1|8|2|6|5|6|6|**...**|3|5|
|self-employed w/o employees<br>9|5|12|5|26|10|10|3|**...**|11|8|
|employee<br>82|93|80|93|66|85|80|91|**...**|85|86|
|family worker<br>0|2|0|0|2|0|4|0|**...**|1|1|
|Total<br>100|100|100|100|100|100|100|100|**...**|100|100|
|**2. Citizens born outside the EU**|||||||||||
|self-employed with employees<br>5|2|2|3|4|**...**|7|5|4|7|4|
|self-employed w/o employees<br>3|9|10|9|18|**...**|17|6|11|14|10|
|employee<br>92|89|87|87|77|**...**|75|90|85|78|86|
|family worker<br>0|0|0|2|1|**...**|1|0|0|0|1|
|Total<br>100|100|100|100|100|**...**|100|100|100|100|100|
|**3. Non-citizens from other EU countries**|||||||||||
|self-employed with employees<br>7|2|10|4|0|1|7|2|6|3|4|
|self-employed w/o employees<br>9|8|20|4|25|4|12|10|2|10|7|
|employee<br>83|90|70|90|70|92|81|88|92|87|88|
|family worker<br>1|0|0|2|6|2|0|0|0|0|1|
|Total<br>100|100|100|100|100|100|100|100|100|100|100|
|**4. Non-citizens born outside the EU**|||||||||||
|self-employed with employees<br>0|5|2|2|2|2|4|4|1|5|2|
|<br>self-employed w/o employees<br>3|8|5|4|11|2|9|13|7|15|7|
|<br>employee<br>96|87|92|94|86|95|87|83|92|73|91|
|family worker<br>0|0|1|0|1|0|0|1|0|7|0|
|Total<br>100|100|100|100|100|100|100|100|100|100|100|

**...** too few observations to permit reliable estimates to be derived.

12
# **4. CONTRIBUTIONS OF MIGRANTS TO NATIONAL TAX AND BENEFIT SYSTEMS**

How much do migrants typically earn? How much do they pay in taxes and consume in benefits?—how do these estimates compare to corresponding statistics for the non-migrant population? These and other such questions are examined in more detail in this section.

**Estimating the fiscal impact of migrants:** Estimating the size and composition of the migrant population using data from household surveys has a long and well-established tradition, with data from labor force surveys typically used to estimate and compare the demographic composition of native-born and migrant population groups. An added benefit of using survey data is that the migrant population as a whole can often be a heterogeneous group, and the survey data allow for a disaggregated examination of differences across different subgroups in the main variables of interest. In order to estimate the net fiscal impact of migrants on a given country’s budget, in addition to information on the size and composition of non-migrant and migrant groups, comprehensive data are also needed both on non-migrants’ and migrants’ consolidated contributions to overall public revenues (i.e. total taxes paid, both direct as well as indirect, contributions paid to the domestic social security system, etc.) as well as their share of consumption of overall public expenditures (i.e. direct benefits received, public goods and services consumed, etc.).

Such country-level studies are relatively rare in number. In the United Kingdom, a 2002 Home Office research study found that in 1999/00, first generation migrants in the UK made a net fiscal contribution of 2.5 billion pounds a year.<sup>10</sup> More recent work by the Institute for Public Policy Research found that migration to the UK has a positive and growing impact on the public finances: migrants contributed an estimated 10 percent of government receipts, and accounted for 9.1 percent of government expenditure.<sup>11</sup> In addition to the fairly onerous data requirements to carry out country-level analysis, an additional complicating factor is that ideally the fiscal contribution of migrants should be considered in both the short- and long-run. In one of the relatively rare such studies available, immigrants to the United States were estimated to make a contribution of around $80,000 to the US fiscal system in net present value terms in 1996 dollars.<sup>12</sup> However, while the surplus was quite large (and positive) for highly skilled migrants, it was estimated to be slightly negative for migrant individuals with less than secondary high school level, thus suggesting that the educational and skills profile of migrants was likely an extremely important determining factor.

Comparing the fiscal impact of migration across countries is even more difficult, as estimates for different countries are sensitive to definitions employed, timing of comparison, as well as duration of the period over which the comparison is being made, as the structure and behavior of the migrant population is subject to change over time in response to changing circumstances and conditions. In this regard, the EU-SILC data set is a particularly useful data set for the purposes of such a crosscountry comparison, given the emphasis according to ensure comparability of concepts and definitions applied across countries. Moreover, it is one of the few data sets available in which

> 10 Gott & Johnston (2002) The Migrant Population in the UK: fiscal effects. Home Office RDS Occasional Paper No. 77.

> 11 Sriskandarajah, Cooley, and Reed 92005) Paying their way: the fiscal contribution of immigrants in the UK, IPPR, as cited in “The Economic and Fiscal Impact of Immigration, Home Office, United Kingdom, October 2007.

> 12 Smith and Edmonston (eds) (1997) The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, Washington DC. National Research Council, National Academy Press, cited in ibid.

13
comprehensive income data are available, including information on taxes paid and benefits received, plus the migrant and non-migrant population groups can be compared over the same time periods.

On the flipside, there are two main shortcomings of using the EU-SILC data for these comparisons. First, despite the fact that the survey contains fairly comprehensive data on tax and benefit receipts, coverage of these is nonetheless still incomplete. For instance, indirect taxes paid (e.g. value-added taxes) are impossible to estimate from such data, as is the consumption of public goods (e.g. use of highways, national parks, etc.). Second, data are typically available for a limited time period (e.g. one year), thus making it difficult to make comparisons across the various sub-groups of interest over a longer time period without making relatively strong assumptions. Finally (though this is a point that applies to all such studies, whether based on the SILC or on any other data set), an important point to bear in mind is that the “economic contribution of migrants” is a much broader concept than the relatively narrow “net fiscal impact” definition employed in this study. However, bearing all these caveats in mind, it is nonetheless informative to compare and contrast estimates of earnings, taxes paid, and benefits received derived using the 2006 EU-SILC data set. We start by presenting some summary statistics on average personal gross earnings and average income taxes paid on those earnings in selected EU countries, as well as how these amounts vary across the five main sub-groups of interest (Table 7).<sup>13</sup>

**Table 7: Average Personal Earned Income and Personal Income Tax**

|||||**E**|**urosperyea**<br>|**r**<br>||||
|---|---|---|---|---|---|---|---|---|---|
||**Austria**|**Belgium**|**Spain**|**France**|**Ireland**|**Sweden**|**UK**|**EU 4**|**EU13**|
|**Average Personal Earned Income**||||||||||
|Native-born population|21,430|23,074|12,474|19,193|23,593|22,837|26,373|4,093|20,790|
|1. Citizens born in other EU countries|23,338|19,825|12,617|18,768|24,519|24,284|**...**|4,445|20,489|
|2. Citizens born outside the EU|16,187|15,293|11,169|18,874|**...**|14,667|25,419|6,013|20,166|
|3. Non-citizens from other EU countries|20,442|23,373|10,785|20,811|22,965|15,361|28,656|5,873|21,226|
|4. Non-citizens born outside the EU|12,721|13,268|9,575|10,644|17,140|8,310|22,347|4,329|14,970|
|All migrants (i.e. groups 1-4)|15,766|17,754|10,278|16,038|22,001|15,089|24,097|4,929|18,072|
|**Average Personal Income Tax**||||||||||
|Native-born population|6,273|7,736|2,292|N/A|5,071|7,148|7,280|1,135|5,375|
|1. Citizens born in other EU countries|7,032|6,843|2,306|N/A|5,329|7,483|**...**|1,057|6,050|
|2. Citizens born outside the EU|4,247|4,886|1,716|N/A|**...**|4,487|7,504|1,752|6,039|
|3. Non-citizens from other EU countries|7,203|7,736|1,944|N/A|4,781|4,854|7,944|1,492|6,087|
|4. Non-citizens born outside the EU|3,247|4,509|1,382|N/A|2,987|2,578|6,301|964|4,287|
|All migrants(i.e.groups 1-4)|4,180|5,532|1,569|N/A|4,337|4,567|6,630|1,042|4,973|

**Note:** Computed over all adults aged 21-55 years, regardless of employment status. Average personal earned incomes for France are not comparable to other countries, as data on taxes paid are not available (i.e. only have earnings net of taxes). **...** too few observations to permit reliable estimates to be derived.

**Personal earnings and income taxes:** In EU13 countries, average earnings of the various population groups are quite similar, with one notable exception: non-citizens born outside the EU (group 4) have substantially lower earnings than others (about 70 percent of average earnings of other groups). Non-citizen migrants in France and Sweden born outside the EU stand out in this respect, as their average earnings are only 52 percent and 36 percent of what non-migrants earn in these respective countries (Table 7).<sup>14</sup> Having lower earnings on average, these migrants tend to pay

> 13 Income tax is calculated as a difference between reported gross and net earnings for individuals. Income tax information was not available for Denmark, Finland, France, Greece, Italy, Netherlands, Portugal, Hungary and Slovakia.

> 14 Part of the difference in earnings can be explained by the differing profile: as noted earlier, these migrants tend to have lower rates of employment and higher share of lower-educated blue-collar workers than native-born population.

14
lower income taxes than other groups: about one thousand euros less than the native born population. Sweden (and France) shows the biggest difference between earnings of natives and migrants: for instance, group 4 migrants in Sweden earn about fourteen thousand euros per year less than the native-born population, and correspondingly pay about four thousand euros less in income taxes per year. In the EU4 countries, by contrast, migrants tend to have higher earnings on average than the native born population, a finding consistent with the education and occupation profile of migrants in these countries. However, in the cases of taxes paid by these groups, no such clear pattern is evident: while citizens born outside the EU as well as non-citizens from other EU countries tend to pay higher amounts of taxes on average than the native-born population, the converse is true for citizens born in other EU countries as well as non-citizens born outside the EU.

**Table 8: Average Benefits Receipts**

|||||**Eu**<br>|**rosperyea**<br>|**r**<br>||||
|---|---|---|---|---|---|---|---|---|---|
||**Austria**|**Belgium**|**Spain**|**France**|**Ireland**|**Sweden**|**UK**|**EU 4**|**EU13**|
|**Total Benefits**||||||||||
|Native-born population|6,414|5,093|2,375|5,400|4,417|6,577|5,018|1,083|4,822|
|1. Citizens born in other EU countries|12,414|4,858|1,286|8,321|4,007|9,561|**...**|2,476|7,666|
|2. Citizens born outside the EU|4,352|3,643|1,719|6,604|**...**|6,124|4,357|2,470|5,064|
|3. Non-citizens from other EU countries|4,660|4,803|2,259|4,638|2,519|4,159|4,334|904|4,306|
|4. Non-citizens born outside the EU|2,378|3,984|327|3,391|2,943|5,135|1,974|351|2,311|
|All migrants(i.e.groups 1-4)|4,954|4,307|908|5,535|3,126|6,231|3,645|2,103|4,291|

**Note:** Computed over the population aged 16 years and older. **...** too few observations to permit reliable estimates.

**Personal benefits:** Summary statistics on average benefits receipts by the migrant and nonmigrant working-age populations are presented in Table 8 for selected EU countries.<sup>15</sup> Unlike the case of average incomes and taxes described above, the picture of benefits received by the various groups is somewhat more complex. On the one hand, in both the EU4 and EU13 country groups, citizens born outside the country consume more benefits than the native-born population group while the opposite is true of non-citizens born outside these countries. The overall average for EU13 countries conceals considerable differences across individual countries. Citizens of Austria, France, and Sweden born in other EU countries consume considerably higher benefits than the native-born populations in these respective countries (Table 8); this is not true for other countries. Similarly, France is the only country where the “citizens born outside the EU” group in fact consumes higher benefits than the native-born population. Finally, non-citizen migrant groups in all countries in Table 8 collect, on average, lower benefits than the respective native-born populations.

To sum, the evidence presented in tables 7 and 8 does not support the contention that migrants contribute less overall to the national tax and benefit systems of the countries where they reside. In EU13 countries as a whole, migrants do appear to pay slightly lower taxes on average, but they also consume lower benefits than the native-born population. While the “non-citizens born outside the EU” group pays lower taxes on average than the native-born population, this group also consumes significantly lower total benefits than other groups.

> 15 These benefits include unemployment, retirement and early retirement pension, survivor’s pensions, sickness and disability benefits, education, housing allowances, child-support benefits and social-exclusion benefits.

15
**Household-level Analysis based on 2006 EU-SILC data:** The analysis presented so far has tended to focus at the level of individuals of working-age: is the picture significantly different at the household-level? For instance, if migrant households tend to be much larger than non-migrant households, or if they have much fewer earning members, the above analysis may have distorted the true picture. Before examining the above set of statistics—earnings, taxes, and benefits—at the percapita level (i.e. averaged over all household members), we turn first to comparing the demographic composition of migrant and non-migrant households (Table 9). Average household sizes of migrant households, both of those born within as well as outside the EU, are indeed somewhat larger than households with no migrants in EU 13 countries (2.6 and 2.8 vs. 2.4 persons per household respectively). However, while migrant households tend to have more children than households with no migrants, they also have a higher number of persons of working-age population, and tend to have fewer elderly people (Table 9). Therefore the number of dependents (children plus elderly) expressed as a ratio of the number of working-age population tends to be quite similar across these groups. In EU4 countries, the pattern is reversed: migrant households tend to have fewer children and more elderly compared to non-migrant households, and relatively fewer people of working-age population.

**Table 9: Average Household Demographic Composition**

||||**Average n**<br>|**umber ofp**<br>|**eople in de**<br>|**signated age-**<br>|**group**<br>|||
|---|---|---|---|---|---|---|---|---|---|
||**Austria**|**Belgium**|**Spain**|**France**|**Ireland**|**Sweden**|**UK**|**EU 4**|**EU13**|
|**Households with no migrants**||||||||||
|# aged 0-20 years|0.5|0.5|0.6|0.6|0.9|0.6|0.5|0.7|0.5|
|# aged 21-55 years|1.1|1.1|1.4|1.0|1.3|0.9|1.1|1.4|1.1|
|# aged 56+ years|0.6|0.6|0.8|0.6|0.6|0.6|0.7|0.6|0.7|
|Total household size|2.3|2.2|2.8|2.2|2.8|2.0|2.3|2.8|2.4|
|**A. Households with migrants born i**|**n EU-countries**|||||||||
|# aged 0-20 years|0.4|0.7|0.8|0.5|1.2|0.5|0.6|0.4|0.6|
|# aged 21-55 years|1.0|1.3|1.6|1.0|1.7|0.9|1.2|1.1|1.2|
|# aged 56+ years|0.7|0.6|0.5|0.8|0.3|0.7|0.8|1.1|0.7|
|Total household size|2.2|2.5|2.9|2.4|3.2|2.2|2.6|2.6|2.6|
|**B. Households with migrants born i**|**n non-EU coun**|**tries**||||||||
|# aged 0-20 years|1.0|1.1|1.0|0.9|1.1|1.1|0.9|0.4|0.9|
|# aged 21-55 years|1.7|1.6|1.9|1.3|1.8|1.4|1.6|0.9|1.5|
|# aged 56+ years|0.3|0.3|0.3|0.6|0.2|0.3|0.4|1.0|0.4|
|Total household size|3.0|3.0|3.2|2.8|3.0|2.8|2.9|2.4|2.8|

Table 10 summarizes total earnings as well as all reported taxes and benefits received by households for the various population sub-groups of interest.<sup>16</sup> Entries in the row labeled “net taxes” are the difference between total taxes paid and total benefits received by the household—i.e. a positive value indicates that households in the groups are net tax contributors while a negative value shows the opposite is true (i.e. households are net recipients of benefits).

> 16 Unlike table 7, which reported income tax only, taxes in Table 10 include income tax, tax on property and wealth, and employer’s social contributions. Similarly, total earnings additionally include income from property, interests and dividends, and income earned by persons under 16 years old. Finally, total benefits include all individual and household level benefits. All terms are calculated on a per capita basis to aid comparability across the different population sub-groups

16
**Table 10: Total Household Earnings, Taxes Paid, and Benefits Received**

||||**All amoun**|**ts in euros**|**per capita**|**peryear**|||
|---|---|---|---|---|---|---|---|---|
||**Austria**|**Belgium**|**Spain**|**Ireland**|**Sweden**|**UK**|**EU 4**|**EU13**|
|**Households with no migrants:**|||||||||
|Gross Earned Income|12,654|13,179|7,675|13,646|13,743|15,726|2,429|12,926|
|Benefits|5,609|4,424|2,073|3,896|5,516|4,339|906|3,961|
|Taxes|4,353|4,595|1,315|2,779|6,005|4,866|703|4,108|
|Net income|13,910|13,007|8,433|14,763|13,254|15,199|2,632|12,779|
|Net taxes|-1,256|171|-758|-1,117|489|527|-203|147|
|Number of observations|5,047|4,799|11,229|4,995|5,723|8,661|33,766|64,377|
|**1. Households with citizens born in**|**other EU coun**|**tries**|||||||
|Earned Income|10,684|12,164|8,992|13,108|13,208|**...**|1,979|12,312|
|Benefits|9,621|4,204|1,561|2,914|6,979|**...**|1,600|5,076|
|Taxes|5,172|4,387|1,671|2,572|6,247|**...**|557|4,334|
|Net income|15,133|11,981|8,882|13,451|13,941|**...**|3,022|13,054|
|Net taxes|-4,449|183|110|-342|-732|**...**|-1,043|-742|
|Number of observations|276|216|124|394|337|**...**|719|1,784|
|**2. Households with citizens born ou**|**tside the EU**||||||||
|Earned Income|9,247|9,719|7,850|**...**|8,956|15,056|2,009|12,866|
|Benefits|3,361|2,818|1,445|**...**|4,357|3,090|1,848|3,157|
|Taxes|2,632|3,100|1,277|**...**|3,753|4,534|682|4,018|
|Net income|9,976|9,438|8,018|**...**|9,561|13,611|3,175|12,005|
|Net taxes|-729|282|-168|**...**|-604|1,444|-1,166|861|
|Number of observations|323|343|280|**...**|491|730|542|2,950|
|**3. Households with non-citizens fro**|**m other EU co**|**untries**|||||||
|Earned Income|14,262|14,172|8,010|15,293|11,410|15,294|4,124|13,856|
|Benefits|3,357|3,136|1,342|2,334|3,057|<br>2,933|855|2,815|
|Taxes|4,263|4,644|1,468|3,026|4,442|4,390|1,016|4,228|
|Net income|13,357|12,663|7,884|14,601|10,025|13,837|3,964|12,443|
|Net taxes|906|1,508|126|692|1,385|1,457|161|1,413|
|Number of observations|165|353|106|284|168|96|103|1,423|
|**4. Households with non-citizens bor**|**n outside the**|**EU**|||||||
|Earned Income|9,271|9,187|6,850|10,773|7,332|16,544|3,128|12,576|
|Benefits|2,336|2,842|435|2,715|3,983|1,961|490|1,842|
|Taxes|2,378|2,943|948|1,783|3,022|4,828|767|3,482|
|Net income|9,230|9,085|6,337|11,705|8,293|13,678|2,850|10,937|
|Net taxes|42|101|513|-932|-961|2,867|277|1,640|
|**All households with migrants (i.e. gr**|**oups 1-4)**||||||||
|Earned Income|10,506|11,540|7,461|13,635|10,363|15,925|2,225|12,995|
|Benefits|4,185|3,177|938|2,674|4,822|2,896|1520|2,978|
|Taxes|3,366|3,806|1184|2,645|4,474|4,794|643|3,990|
|Net income|11,325|10,910|7,215|13,663|10,711|14,027|3,102|11,982|
|Net taxes|-819|630|246|-28|-348|1,898|-877|1,012|
|Number of observations|976|1,052|918|841|1,080|1,237|1,457|7,692|

**Note:** Computed on a per-capita basis. **...** too few observations to permit reliable estimates.

The key summary statistic “Net taxes” is presented in Figure 3 for different population subgroups of interest. The 2006 EU-SILC data show that an average household in EU13 countries with no migrants pays net taxes of 147 euros per capita per year (Є 4,108 total taxes minus Є 3,961 total benefits). By this measure, households with citizens born in other EU countries are the biggest beneficiaries of the national tax and benefits systems, receiving net benefits of 742 euros per year. However, this group is not very large, comprising about 1 percent of the total population of EU13 countries. As Figure 3 shows, all other migrant groups in EU13 countries are significant netcontributors to the national tax and benefit systems. Households with citizens born outside the EU pay 861 euros per capita more in taxes than they receive in benefits. Households with non-citizen migrants are even larger net contributors, paying 1,413 and 1,640 euros per capita per year on average, depending upon whether the country of origin is within or outside the EU respectively.

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Moreover, as shown earlier in Figure 2, these two population sub-groups account for the bulk of all migrants in EU13 countries (about 6 percent of the total population of EU13 countries).

**Figure 3: Net Taxes Paid: EU13 Countries (Migrant and Non-Migrant Populations)**

<!-- Start of picture text --> 2,000<br>1,640<br>1,500 1,413<br>1,012<br>1,000 861<br>500<br>147<br>-742<br>0<br>Households with 1. Households 2. Households 3. Households 4. Households All households<br>no migrants with citizens born with citizens born with non-citizens with non-citizens with migrants<br>-500 in other EU outside the EU from other EU born outside the (Groups 1-4)<br>countries countries EU<br>-1,000<br>Euros per capita per year<br><!-- End of picture text --> Summing “net taxes paid” across the four migrant groups, our calculations suggest that taken together migrants make a net contribution of approximately Є 42 billion euros to the national tax and benefit systems of EU13 countries.

# **5. SELECTED COUNTRY CASES AND CONCLUDING OBSERVATIONS**

Belgium and the United Kingdom stand out in comparison to other countries presented in Figure 4 in terms of the low “net benefits” accruing to households living in these countries. Figure 4 also highlights some interesting differences across countries in the pattern of net benefit receipts.

Sweden stands out as being the only country where migrant households tend to be net beneficiaries—households with non-citizen migrants from other EU countries are the only subgroup in Sweden whose net contribution to the national tax and benefits system is in fact greater than that of the “households with no migrants” group. In virtually all other country cases presented in Figure 4, the reverse is true—i.e. migrant households tend to contribute more to the national tax and benefits system than households with no migrants.<sup>17</sup>

> 17 The “households with citizens born in other EU countries” in Austria is the only exception.

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**Figure 4: Net Taxes Paid: Selected Countries (Migrant and Non-Migrant Populations)**

<!-- Start of picture text --> Austria Belgium<br>1,000 906 2,000<br>-1,256 -4,449 -729 42 -819<br>1,508<br>Households with 1. Households 2. Households 3. Households 4. Households All households 1,500<br>no migrants with citizens born with citizens born with non-citizens with non-citizens with migrants<br>-1,000 in other EUcountries outside the EU from other EUcountries born outside theEU (Groups 1-4)<br>1,000<br>630<br>500<br>-3,000 282<br>171 183 101<br>0<br>Households with 1. Households 2. Households 3. Households 4. Households All households<br>no migrants with citizens born with citizens born with non-citizens with non-citizens with migrants<br>-5,000 -500 in other EUcountries outside the EU from other EUcountries born outside theEU (Groups 1-4)<br>Spain Ireland<br>1,000 1,000<br>692<br>513 500<br>500<br>246<br>110 126 0 -1,117 -342 Too few obs. -932 -28<br>-758 -168 Households with 1. Households 2. Households 3. Households 4. Households All households<br>0 no migrants with citizens born with citizens born with non-citizens with non-citizens with migrants<br>Households with 1. Households 2. Households 3. Households 4. Households All households in other EU outside the EU from other EU born outside the (Groups 1-4)<br>no migrants with citizens born with citizens born with non-citizens with non-citizens with migrants -500 countries countries EU<br>in other EU outside the EU from other EU born outside the (Groups 1-4)<br>countries countries EU<br>-500<br>-1,000<br>-1,000 -1,500<br>Sweden United Kingdom<br>1,500 1,385 3,000 2867<br>2,500<br>1,000<br>2,000 1898<br>500 489 1,500 1444 1457<br>-732 -604 -961 -348 1,000<br>0<br>Households with 1. Households 2. Households 3. Households 4. Households All households 527<br>no migrants with citizens born with citizens born with non-citizens with non-citizens with migrants 500<br>in other EU outside the EU from other EU born outside the (Groups 1-4)<br>-500 countries countries EU Too few obs.<br>0<br>Households with 1. Households 2. Households 3. Households 4. Households All households<br>-1,000 -500 no migrants with citizens bornin other EU with citizens bornoutside the EU with non-citizensfrom other EU with non-citizensborn outside the with migrants(Groups 1-4)<br>countries countries EU<br>Euros per capita per year Euros per capita per year<br>Euros per capita per year Euros per capita per year<br>Euros per capita per year Euros per capita per year<br><!-- End of picture text --> In virtually all the EU countries covered in Figure 4, non-citizen migrants from other EU countries contribute significantly more money to the national tax and benefits systems as compared to the native-born population. For instance, Ireland, Sweden, and the United Kingdom were the three main EU15 countries that did not impose restrictions on migrants from EU10 countries following the 2004 EU enlargement, and consequently were the main destinations of choice for emigrants from EU10 countries. As Figure 4 clearly shows, the “non-citizen migrants from other EU countries” in all three countries pay significantly higher “net taxes” as compared to the non-migrant population. On examining more closely possible reasons why, we find that differences in retirement 19
benefits received by these two sets of groups almost single-handedly help explain the observed differences: migrants tend to be considerably younger than the non-migrant population, with a much lower share of household members of retirement age; as a result, they receive significantly lower retirements benefits than the native-born population (Annex Table 15).

With regard to non-citizen migrants from outside the EU, we find that this group also tends to receive significantly lower net benefits compared to the native-born population in most countries, the exceptions being Ireland and Sweden (Figure 4). The contrast between the non-citizen non-EU migrant groups in Austria and the United Kingdom is instructive: as noted earlier in Section 1, of all EU members, these countries have the largest proportion of migrant population born outside the EU. However, while such migrants in Austria tend to have relatively low educational attainment in relative to the rest of the population, the opposite is true for such migrants in the United Kingdom: as Annex Table 11 shows, 46 percent of non-citizen non-EU migrants in Austria have lower secondary education; by contrast, almost half the corresponding migrant group in the United Kingdom have completed tertiary or higher education (Annex Table 11). These differences in educational attainment (and consequently nature of employment taken up) of these two groups go a long way in helping to explain why such migrants make a significantly larger contribution to the national tax and benefit system in UK as compared to Austria.

To sum, despite the purported surge in internal migration following the 2004 round of EU enlargement, the 2006 EU-SILC data show that internal migrants are a relatively small share of the EU’s population: depending on the exact definition used, only about 1-2 percent of the population of EU13 countries were born in other EU countries, while the corresponding share for EU4 countries is even lower. By contrast, about 6 percent of the population of EU13 countries was born in other non-EU countries.

On examining the demographic and socio-economic background of the migrant population (i.e. both from within as well as outside the EU), we find that migrants tend to include a concentration of both low as well as highly educated workers. Both sets of migrants uniformly contribute to raising the working-age population of receiving countries.

Finally, using data on average incomes and taxes paid and benefits received by migrant and nonmigrant households, we find no evidence to support the contention that migrant workers contribute less in taxes than the native-born population, or consume significantly higher benefits. On the contrary, our calculations suggest that migrant workers make a net contribution of approximately 42 billion euros to the national tax and benefit systems of EU13 countries.

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