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Migration
Net benefits
The economic effects
of migration on host countries depend on the levels of welfare benefits
afforded to migrants and their contributions to government revenues
through payments of direct and indirect taxes. In Discussion Paper No.
934, René Weber and Research Fellow Thomas Straubhaar use
data from the Swiss Statistical Office's 1990 Consumer Survey to
investigate whether resident foreigners are a burden or a benefit for
the Swiss public transfer system. These combine detailed records of
households' income and expenses together with social security and tax
data and details of age, nationality, employment and qualifications for
some 12,000 households. Their results indicate that each foreign
household made an average net contribution of some $1,700 to the public
transfer system. This `snapshot' approach cannot measure the full
effects of migration over the life-cycle or changes in the population's
demographic composition, however, or the possible impact of the business
cycle.
The results of Weber and Straubhaar's regressions indicate that the age
and level of qualification of the head of the household and the number
of children all affect the transfer balance for sub-samples of foreign
and native households, and estimating the resulting model for the entire
sample with a dummy variable for foreign households reveals that these
are still more likely to make a positive net contribution to the public
budget. The government's provision of public services is equivalent to
disseminating a large bundle of rights of use. Immigrants acquire some
of these automatically on entering the host country (while forgoing
similar claims in their home countries) and they also generate costs as
the use of public infrastructure such as roads, schools and hospitals
increases (although these may be offset by their contributions to the
public budget through taxes). Weber and Straubhaar conclude that their
empirical results provide no support for such a theoretical
justification for restricting numbers of immigrants: in Switzerland,
resident foreigners are most likely to be net contributors to the
government budget.
Budget Incidence of Immigration into Switzerland: A Cross-Section
Analysis of the Public Transfer System
René Weber and Thomas Straubhaar
Discussion Paper No. 934, April 1994 (HR)
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