Migration, Household Employment & Europe’s Public Finances

Migrants’ fiscal contribution depends on the employment and earnings of every adult in the household, as well as national taxes and welfare. This paper makes three contributions. First, it documents that Europe increasingly receives migrants from Central Asia, South Asia, the Middle East and North Africa (CASAMENA), where female employment is extremely low. A wealth of research suggests this is because male honour depends on female seclusion; we call these “seclusion-origin” countries. Second, we assemble harmonised data from Europe and North America, and show that such female migrants have very low employment, often persisting in the second generation. Men from these countries are concentrated in low-paid work. Third, we replicate the UK government’s Migration Advisory Committee fiscal model and show how sensitive its presumed positive fiscal impacts are to relatively optimistic assumptions around employment and earnings. In the final part of our paper we detail our methodology and extend the model through the tax, welfare and pension rules of Germany, Spain, France and Britain. Using a common calibration informed by seclusion-origin employment profiles, with earned-and-credited UK NI pensions, our model projects that a male entrant with an economically inactive wife and two children needs entry pay between p68.6 and p80.3 on the national full-time pay distribution for the family to break even. Even if his wife works at the calibrated pay, he must still earn above median national pay for the family to break even. Below that, the specified family scenarios generate projected net fiscal costs. In brief, we show that if a government taxes low earners lightly and provides these groups with generous benefits, and a woman is economically inactive, then her male partner needs to earn a very high salary for their family to make a positive fiscal contribution.