The Fiscal Impact of Immigrants in Austria – A Generational Accounting Analysis

Empirica, 32/2, 181-216, 2005

Posted: 27 Sep 2019

See all articles by Karin Mayr-Dorn

Karin Mayr-Dorn

Johannes Kepler University of Linz

Date Written: 2005

Abstract

In this paper, we employ generational accounting to analyse the inter-temporal stance of Austrian public finance in 1998 as well as the inter-temporal fiscal impact of immigration to Austria. Immigrants affect inter-temporal fiscal balance in essentially two ways. Firstly, they have a demographic effect in enlarging the population (and thus the tax base) and in altering its age- (and gender-) composition. Secondly, they change the fiscal characteristics of age cohorts due to a representative immigrant exhibiting higher or lower tax and transfer payments than a representative native of the same age and gender. The overall fiscal effect of immigration is found positive, under the assumption that the age and fiscal characteristics of future immigrants resemble those of the current immigrant population in Austria. This is due to a favourable age composition and lower per capita net transfer receipts during retirement age, which compensate for lower per capita net tax payments during working age. However, immigration is not likely to achieve inter-temporal fiscal balance, even if immigration increases or migrants are screened by skill or age.

Keywords: fiscal imbalance, generational accounting, immigration

JEL Classification: F22, H61, E66

Suggested Citation

Mayr-Dorn, Karin, The Fiscal Impact of Immigrants in Austria – A Generational Accounting Analysis (2005). Empirica, 32/2, 181-216, 2005, Available at SSRN: https://ssrn.com/abstract=3455897

Karin Mayr-Dorn (Contact Author)

Johannes Kepler University of Linz ( email )

Altenbergerstrasse 69
Linz, Upper Austria 4040
Austria

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