The Net Fiscal Contribution of Foreigners in Germany

• In Event: Global Distribution, Migration, and Shocks

Abstract

The present paper estimates the net fiscal contribution (NFC) of foreigners in Germany, based on data from the Socio-Economic Panel. It updates earlier studies and captures the situation after the arrival of a large number of refugees and migrants in the 2010s.We find that German nationals had in 2018 an average NFC of 629 euros, i.e. they paid more in terms of taxes and social security contributions than they received in terms of cash or in-kind transfers. The NFC was even higher for EU nationals, for which the difference was on average 3,175 euros. Nationals from non-EU countries had a negative NFC of -2,633 euros. For all three groups, the aggregate NFC is fairly small in relation to GDP. The combined NFC of foreigners in Germany in 2018 was only slightly negative, at -2.5 billion euros or about 0.07% of GDP. An age-adjusted measure of NFC changes the ranking of the three groups. German nationals have the highest NFC over their synthetic life cycle, with EU nationals ranking second, while the NFC of non-EU nationals is slightly more negative in this case.

Author

• Holger Stichnoth, ZEW Mannheim