A recent study by the Germany-based Institute of Labor Economics (IZA) has shed new light on the fiscal effects of immigration in the Netherlands.
The research, authored by Jan van de Beek, Joop Hartog, Gerrit Kreffer, and Hans Roodenburg, offers a detailed analysis of how migrants contribute to—or burden—the Dutch economy, based on their reasons for migration, country of origin, and generational background.
The findings are particularly timely as the Dutch government intensifies its efforts to manage migration and debates a cap on population growth.
Labour Migrants: Net Contributors to the Economy
The study reveals that labour migrants are the most fiscally beneficial group, contributing more than €100,000 on average when arriving between the ages of 20 and 50. Many of these migrants come from countries such as the UK, US, and Japan, with North American migrants topping the list by contributing an average of €210,000 over their lifetimes. Their strong labour market integration and high earning potential significantly boost public revenues through taxes and social security contributions.
Asylum Seekers and Family Migrants: Significant Fiscal Costs
In contrast, asylum seekers and family migrants impose the greatest financial burden on Dutch taxpayers. The study estimates that asylum seekers cost the state approximately €400,000 over their lifetimes, driven by weak labour market integration, reliance on social benefits, and high initial costs for asylum reception and integration programs. Similarly, family migrants, who form a significant portion of incoming migrants, also have negative fiscal impacts due to lower average incomes and higher dependency on welfare.
The burden, the study notes, is not solely due to direct government spending on these groups but primarily stems from their lower tax and social security contributions. This highlights the economic challenges of integrating certain migrant groups into the workforce.
Regional Disparities in Contributions
The study provides a detailed map of the fiscal impact of immigrants from 42 regions, illustrating stark contrasts in outcomes:
- Positive Contributions: Migrants from Western countries, particularly North America, Scandinavia, and Japan, contribute positively. For instance, Japanese migrants were identified as significant contributors due to their high skill levels and strong labour market performance.
- Negative Contributions: Migrants from conflict-affected regions, such as Sudan, Syria, Afghanistan, and Iraq, pose substantial fiscal challenges. The lifetime fiscal deficits for these groups can exceed €300,000, underscoring the difficulties in integrating asylum seekers from these regions.
Net contribution of first-generation immigrants for 42 regions of origin, with remigration, source: IZA DP No. 17569
Generational Insights: Second Generation Shows Improvement
While the first generation of immigrants often struggles to make positive fiscal contributions, second-generation migrants generally perform better. Their educational outcomes align closely with native Dutch peers, but their income levels remain lower, reducing their fiscal contributions. This gap suggests that structural labour market barriers, rather than educational attainment, hinder economic mobility.
Policy Context: A Tough Stance on Migration
The Dutch government, under Prime Minister Dick Schoof, has introduced a range of measures to control migration. These include temporary border controls within the Schengen zone to combat irregular migration and human trafficking. The government has also signalled its intent to cap the population at 20 million by 2050, aiming to “get a grip on migration” through selective and targeted policies for labour and education-related movement.
Immigration Minister Marjolein Faber and Social Affairs Minister Eddy van Hijum have described the measures as the “toughest ever package” to limit asylum and irregular migration. They have also called for more research to develop sustainable migration policies, emphasising the economic and social pressures posed by an ageing population and workforce gaps.
Balancing Workforce Needs and Fiscal Realities
Despite the push to curb immigration, the Dutch government faces a dilemma. Statisticians and economists warn that the Netherlands will need approximately three million additional workers by 2040 to sustain economic growth and support its ageing population. However, the government’s advisory body on migration has deemed this target unrealistic, suggesting instead that current residents work longer hours or delay retirement.
A Call for Targeted Policy
The IZA study highlights the varied fiscal impacts of immigration, showing the importance of implementing well-targeted, data-driven policies. Skilled labour migrants from economically advantageous regions boost public finances, but the integration of asylum seekers and family migrants presents ongoing challenges. Improving workforce participation and removing barriers to employment are key steps to reducing these fiscal pressures.
As the Netherlands refines its migration policies, finding a practical balance between economic needs, public sentiment, and social responsibilities will be essential. This study provides valuable insights to guide policymakers in making informed, effective decisions.
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