Fiscal Impacts of Immigration in the EU: Does Reality Shape Perception?

• In Event: The Political, Economic and Social Ramifications of Immigration

Abstract

Research on attitudes toward immigration has long been divided by a debate over economics or symbolic politics as the leading driver of public opinion. Scholars have struggled to find evidence for the economic argument—especially its most common variant, the labor market hypothesis (Hainmueller and Hopkins 2014; Jeannet 2018). However, the economic impact of immigration—whether real or perceived—may affect attitudes in other ways. In particular, the possible role of the fiscal impact of immigration has been underexplored despite its plausibility. For example, according to recent Eurobarometer survey data, 56% of respondents agreed that immigrants are a burden on the welfare system, compared to only 39% who agreed that immigrants take jobs away from workers in their country (Special Eurobarometer 469). Qualitative evidence also shows that negative portrayals of immigrants by media outlets and citizens often rely on negative associations between immigrants and use or abuse of state benefits systems (Wiggen 2012; Anderson 2013; Loyal 2018).

But do fiscal impacts of immigration help to shape attitudes toward immigration and immigration policy? Existing research provides little guidance on the merits of the fiscal burden hypothesis, which claims the real or perceived negative fiscal impact of immigration on the welfare state leads to negative attitudes toward immigrants and immigration. In this paper, we examine the determinants of citizens’ perceptions of the fiscal impact of immigration. We argue this is an important precondition for evaluating the fiscal burden hypothesis as an independent economic explanation for immigration attitudes. The relationship between perceptions of fiscal burdens and anti-immigration policy preferences is only politically and intellectually significant if it represents some link to the “realistic” fiscal impacts of immigration (Citrin et al. 1997; Scheepers et al. 2002; Tolsma et al. 2008; Schneider 2008).

This is a critical question for the viability of economic explanations of immigration attitudes. To the extent that perceptions stem from fiscal realities, then the fiscal burden hypothesis offers a possible independent explanation for why immigration attitudes vary across countries, states, and even individuals, depending on the nature and salience of these perceptions. On the other hand, if perceptions of fiscal burdens are divorced from reality, and rather arise from some combination of prior attitudes, media coverage, and biased recall of personal experience, this would mean that psychological and sociological explanations underlie any observed correlations between perceptions of fiscal impacts and immigration policy preferences (Chandler and Tsai 2001; Hodson et al. 2009; Cohrs and Stelzl 2010; Duckitt and Sibley 2010). What is at stake, then, is whether economic reality shapes perceptions. If not, then we should view correlations between perceived fiscal impacts and attitudes toward immigration and immigration policy as simply one more symptom of a broader set of anti-immigration attitudes, rooted in media- and culture-driven perceptions rather than in economic realities.

We address this question with the most comprehensive study to date of fiscal impacts of immigration in reality and perception. Our empirical analysis combines multiple data sources to compare 28 EU and European Free Trade Association (EFTA) countries between 2002 and 2014. We match survey data with both novel and previously examined statistical estimates that distinguish between the effects of EU and non-EU immigrants. Further, we test for relationships between individual perceptions and a variety of measures of welfare impacts and systems. Crucially, we also explore whether identity considerations (country-of-birth of benefits recipients) or purely economic considerations (balance between contributions and costs), are more strongly linked to citizens’ evaluations of immigrants as a fiscal benefit or burden.

Our findings suggest that EU nationals’ evaluations of immigrants’ contributions to welfare are partly responsive to how many immigrants receive state benefits (identity considerations), while much less responsive to how much they receive (economic considerations). This points towards identity as indispensable in shaping economic perceptions of immigration. Results of multilevel models with interactions further suggest that fiscal exposure from immigration relates differently to perceptions depending on the capacity and generosity of the country’s welfare system.

In conclusion we suggest that our findings support welfare chauvinism rather than realistic group conflict as an explanatory framework. Nonetheless, with fiscal perceptions somewhat linked to fiscal realities, there remains some scope for the fiscal burden hypothesis as a partial explanation for cross-national and individual variation in immigration attitudes.

Authors

• Yvonni Markaki, University of Oxford

• Scott Blinder, University of Massachusetts, Amherst