policymakers demonstrate

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social insurance benefits from the host to the source country in case of return.
When comparing an initial situation which allows for migrants’ return to the
case of no outmigration, the model predicts an increase in government’s NPV
profiles when admitting highly skilled migrants who are less than 49 years old,
while reducing the NPV in the case of other migrant groups (old, unskilled etc.).
The intuition for this result is that young, highly skilled workers are net contributors
to the welfare state, and restricting their mobility will increase their
overall fiscal contribution to the destination country.
Storesletten (2003) extends the analysis focusing on Sweden. He uncovers
also in this case potential gains from migration. While the qualitative effects of
immigrant’s fiscal impact on the host country finances are similar for the US and
Sweden, the size of potential benefits from high-skilled migration to Sweden
is much smaller than in the US, reflecting important differences between the
two countries in terms of labour market outcomes, fiscal burden and size of the
welfare state.
A second approach applied to study the long-term effect of immigration is
based on the generational accounting technique. This methodology assesses
the redistribution of the tax burden across generations by taking into account
the lifecycle contributions made by current and future generations; it allows
for an in depth analysis of the costs and benefits of immigration in terms of
revenues and expenditures and for a comparison of the potential fiscal effects of
alternative migration policies. The information needed, however, is substantial
and involves reliable demographic forecasts, as well as data on the tax and
transfers structure for each demographic group, detailed data and projections
on government expenditures, information on the initial stock of public debt etc.
Findings from the numerous papers that have applied this methodology indicate
a net fiscal gain if immigrants are highly skilled and relatively young, but
the magnitude of the effects depends on institutional features of the destination
countries. Auerbach and Oreopoulos (1999, 2000) study the fiscal effects
of immigration to the US. They find little evidence of either a positive or negative
effect of changes in the overall level of immigration on public finances.
Only when looking at the impact of skilled immigration do they obtain clear-cut
results: an increase in the share of skilled immigrants unambiguously improves
the US fiscal position. Chojnicki (2013) carries out a similar exercise focusing
on France. His findings indicate a slight positive effect in the long run,
mainly driven by the continuous inflows of working age migrants and by the
net positive contribution of the descendants of first-generation immigrants. The
net gain from immigration is larger if the immigrants entering the country are
highly qualified. However, the magnitude of the effects is not large enough to
significantly reduce government fiscal imbalances. A more sizable positive fiscal
effect of immigration is found by Collado et al. (2004) for Spain, and by
Mayr (2005) for Austria.