How much does immigration contribute to national poverty rates? A decomposition analysis for 17 European welfare states

Abstract

Abstract Over the past decades, many European welfare states failed to reduce poverty. We examine two coinciding trends: the inability to lower poverty rates, and the growth of immigrant populations. Immigrants have become the main contributor to population growth in Europe and have higher poverty risks than natives. This contribution quantifies to what extent national poverty rates were driven by population change. We present a Kitagawa–Blinder–Oaxaca decomposition of national poverty rates in 17 western European countries between 2005 and 2019 using EU-SILC data. The effect of shifting EU and non-EU immigrant populations on poverty rates is heterogeneous: while poverty in some countries increased substantially due to compositional changes, for the majority the effect was small or negligible, including in countries with above-average growth of foreign-born populations. Overall, in two-thirds of country–years changes in the population composition were not the main driver of national poverty rates.