Migration and Long-Term Fiscal Sustainability in Welfare Europe: A Case Study

Abstract

The recent high immigration rates in Europe pose challenges to host countries. How does the magnitude of mass migration affect a country's fiscal sustainability and its welfare system? This case study uses generational accounting to analyze potential repercussions of migration on the sustainability of public budgets. As this paper considers the more recent assumptions of migration and economic development, it provides clear evidence that fiscal sustainability of welfare systems in Europe is likely to be negatively affected by nonselective migration of low-qualified workers. Our findings suggest the implementation of an all-European immigration policy similar to those in the US and Australia.