The Fiscal Effects of Immigration in Finland

The results are consistent with well-known Danish and Dutch studies.

The results concerning the fiscal effects of immigration in Finland are consistent with well-known Danish and Dutch studies

We have published studies on the fiscal effects of different immigrant groups in 2015¹ and 2019². In this text, I compare the results of our research with the well-known Dutch³ and Danish⁴ studies.

Before turning to this comparison, I will briefly review the results of the Danish and Dutch studies and set out the criteria that studies on the fiscal effects of immigration should, at a minimum, fulfill in order to be considered relevant.

Contents

1. The Well-Known Danish and Dutch Studies in Brief

2. The results from Finland are consistent with the Danish and Dutch studies

3. Realized Fiscal Effects by Country and Region of Birth in Our Study

4. Summary

5. How the Comparisons between the Finnish, Danish, and Dutch Studies Have Been Made

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1. The Well-Known Danish and Dutch Studies in Brief

In Europe, several studies have been published on the fiscal impacts of immigration, which are particularly relevant in light of the immigration policies pursued by European countries, because:

1. They are based on reliable registry data that are comprehensively available in many countries regarding the fiscal effects of different population groups.

2. They distinguish between different immigrant groups and compare the results to those of the native population.

The first point is crucial, as it ensures that the findings are grounded in reality rather than in overly optimistic assumptions about the economic performance of different immigrant groups.

The second point is important because it allows immigration policy to be tailored according to which types of immigration are beneficial (or detrimental) to the host country’s public finances. Of course, it is evident that immigration policy is also guided by motives other than purely fiscal considerations.

Calculating the net fiscal effects of immigration is, in principle, quite straightforward: from the average taxes and tax-like contributions paid by different groups, one subtracts the transfers received and the costs of public services used.

Calculating the net fiscal effects of immigration is relatively straightforward. For the credibility of the results, the figures for the components of the net effect should be based on observed data rather than on overly optimistic assumptions about economic performance.

Professor Matt Goodwin, in an excellent contribution, has compiled a rather comprehensive set of European studies that meet the two criteria outlined above:

The economic case for mass immigration is COLLAPSING

In particular, two of the studies referenced by Goodwin have received considerable international attention, including coverage in mainstream media: one conducted by the Danish Ministry of Finance (2023) and another by the research group led by Professor Jan van de Beek (2023).

The study conducted by the Danish Ministry of Finance has received significant public attention, and even the strongly pro-immigration The Economist has referred to it. Source: The Economist, no 9276 (2021).

The results of the Danish study and the Dutch study differ in an important respect: the Danish study concerns only the realized fiscal effects for a single year, whereas the central findings of the Dutch study are so-called lifecycle effects.

The results on lifecycle effects take into account that immigrants also age and make use of costly old-age public services.

Despite this difference, the country-of-origin-specific results are remarkably similar in the two studies, as demonstrated in the comparison prepared by Jonatan Pallesen:

Source: Jonatan Pallesen.

What is common to the findings of the studies cited by Goodwin is the geographical similarity of the results: the net fiscal effects are positive mainly for immigrants arriving from other Western countries and for those coming from outside Europe to take up high-productivity (i.e., high-wage) employment.

In general, low-productivity immigrants constitute a fiscal burden for the taxpayers of the host country—regardless of the nominal reason for migration. (For further reference, see also another Dutch study by Professor Paul de Beer, Labour Migration as a Solution to an Ageing Population? (2024)).

As van de Beek et al. summarize:

"In isolation, only two categories seem favourable for Dutch public finances: study immigration from the EU, and labour immigration from Western countries (except Central and Eastern European countries), Asia (except the Middle East) and Latin America. However, if one takes into account the cost of family migration (chain migration), only labour migration from North America, Oceania, the British Isles, Scandinavia, Belgium, Luxembourg, France, Germany, Austria, Switzerland, Italy, Spain, Israel, India, Singapore, Taiwan, South Korea and Japan is unambiguously positive from a treasury perspective." (p. 19).

Source: Van de Beek et al. (2023).

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2. The results from Finland are consistent with the Danish and Dutch studies

We have published corresponding findings for Finland already in 2015 and 2019.

In 2015 (updated in 2019), we published results concerning the realized net fiscal effects of different immigrant groups in comparison to the Finnish native population⁵. Thus, the results are of the same nature as those of the study conducted by the Danish Ministry of Finance.

These results were already cited in The Nordic Policy Review in 2017:

”Salminen (2015) presents a detailed comparison of the social benefits and the use of public services among immigrants living in Finland by country of birth.” ( p. 93).

In 2019, we published, in turn, a comprehensive study on the lifecycle fiscal effects of asylum seekers originating from Iraq and Somalia and their family members⁶. Iraq and Somalia have been the two largest countries of origin for asylum seekers in Finland.

The findings of both studies are based on comprehensive administrative register data from Finland (see here for a summary (pdf) and details on the realized fiscal effects and here for a summary (pdf) and details on the lifecycle fiscal effects).

Realized Net Fiscal Effects Compared to the Danish Ministry of Finance Study

The results are, in practice, very similar to those of the Danish Ministry of Finance study. Here, age-standardized results are compared to the average net fiscal effects of the native population (= 0) for three groups: Western immigrants, immigrants from the Middle East and North Africa, and other non-Western immigrants.

Age-standardized net fiscal effects for different immigrant groups compared to the native population (= 0). See below for details and sources on how these results were derived.

The results are practically identical in Denmark and Finland. The net effects of Western immigrants are nearly the same as those of the native population. For immigrants from the Middle East and North Africa, the net effects are approximately €20,000 per person lower than for Finns and Danes. For other non-Western immigrants, the results fall in between: in Denmark, they are about €11,000 lower than for Danes of the same age, and in Finland, they are about €8,000 lower than for Danes of the same age.

In the case of the Finnish results, it should be noted that the outcomes would be even closer to the Danish findings under the current structure of immigration. This is because the category of non-Western immigrants here includes those originating from neighboring countries—Estonia and Russia—who previously constituted the largest share of this group. Immigrants from Estonia and Russia, on average, have more favorable net effects than other members of this group.

Lifecycle Fiscal Effects of Asylum Seekers from the Middle East Compared to the Dutch Study

The results concerning the lifecycle effects of asylum seekers originating from the Middle East are very similar both in our published study (2019) and in the study by van de Beek et al. (2023).

Lifecycle fiscal effects of a single asylum seeker from the Middle East. See below for details and sources on how these results were derived.

In our study, the net cost of one asylum seeker to the Finnish taxpayer amounts to approximately €730,000 over the course of the individual’s lifetime. In the study by van de Beek et al., the corresponding figure is €660,000.

The results are strikingly similar, considering that the studies were conducted entirely independently of each other and concern different countries and different periods.

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3. Realized Fiscal Effects by Country and Region of Birth in Our Study

Below are presented the annual age-standardized averages of net fiscal effects, compared to the Finnish native population (Finnish native population = 0).

The results are shown both by country of birth⁷ for the ten largest immigrant groups in 2011 and by region of birth⁸ for immigrants.

Source: Suomen Perusta (2019), p. 178.

Source: Suomen Perusta (2019), p. 178.

The results presented above concern those aged 20–62, that is, the working-age population. They show that immigrants cannot “replace” Finnish working-age individuals from the perspective of public finances.

In Finland as well, public statements in favor of immigration are based on the unrealistic assumption that immigrants’ economic performance—and thus their fiscal impact—would be roughly the same as that of the native population. In reality, this occurs only in the case of Western immigrants when results are examined by region of origin.

The only fiscal advantage of immigrants who arrive during their working age, compared to the native population, stems over the life cycle from the fact that they themselves do not generate childhood-related costs (although in the case of Iraqis and Somalis, this does not prevent life-cycle fiscal impacts from exceeding -500,000 euros).
On the other hand, it should be noted that by arriving at working age, they forgo the childhood period that at least facilitates the acquisition of the Finnish language and Finnish education.
Furthermore, it should be taken into account that the children of most immigrant groups born in Finland achieve significantly weaker learning outcomes than the children of the native population⁹, and as young adults they receive social assistance far more frequently than their native peers¹⁰.

Here are the numbers from the above charts (rounded to the nearest ten euros):

By country of birth:

• Finland: 0

• All foreign-born: -8,960

• Somalia: -26,850

• Iraq: -22,860

• Thailand: -15,040

• Turkey: -11,330

• Former Yugoslavia: -11,240

• Formed Soviet Union: -9,170

• China: -6,770

• Sweden: -5,910

• Estonia: -4,380

• Germany: +1,040

And by region of birth:

• Finland: 0

• All foreign-born: -8,960

• Middle East and North Africa: -19,240

• Southeastern Asia: -14,020

• Sub-Saharan Africa: -11,070

• Latin America and Other: -9,380

• Eastern Europe and Caucasia: -7,450

• East Asia: -6,560

• South Asia: -3,310

• Western countries: -2,060

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4. Summary

• Age-standardized realized net fiscal effects. The results concerning Western, Middle Eastern and North African, and other non-Western immigrants are strikingly similar in both the study conducted by the Danish Ministry of Finance (2023) and the study published by Suomen Perusta (2019).

  • Only Western immigrants perform roughly on par with the native population during working age in terms of net fiscal contributions. In other words, non-Western immigrants do not “replace” the working-age native population from a fiscal perspective. The most negative impacts are associated with immigrants originating from the Middle East and North Africa.

• Lifecycle fiscal effects. The results for immigrants from Iraq (Suomen Perusta, 2019) and from West Asia (~the Middle East) in the study by Van de Beek et al. (2023) are nearly identical. This is particularly noteworthy, as the studies were conducted independently in different countries and for somewhat different periods of time. Nevertheless, both studies reach the conclusion that the average net fiscal impact of a single immigrant from the Middle East amounts to approximately –700,000 euros per person.

  • The study by Van de Beek et al. (2023) also includes lifecycle effects for groups other than asylum seekers from the Middle East. Producing corresponding estimates for Finland would be a valuable objective. Based on the comparisons presented in this text, it is reasonable to assume that these other lifecycle effects in Finland would be of a similar order of magnitude to those reported in Van de Beek et al.’s study.

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5. How the Comparisons between the Finnish, Danish, and Dutch Studies Have Been Made

Danish kroner were converted into euros using the rate 1 DKK = 0.134 euros (exchange rate as of 5 December 2024).

All amounts in euros are presented in 2023 prices. The sums in euros were converted into 2023 values using Statistics Finland’s value of money calculator, which is based on the cost-of-living index in Finland. While the development of the cost-of-living index in Finland over the past ten years may differ slightly from that in the Netherlands and Denmark, this is unlikely to have any material impact on the scale of the results¹¹.

Realized Net Fiscal Effects Compared to the Danish Ministry of Finance Study

The age-standardized figures from the Danish Ministry of Finance study were taken from the Danish-language report, page 12, figure 2.7. The figures used refer to the “first” generation of immigrants. The age-standardized net effect figures, compared with native Danes, were obtained simply by subtracting the figures for other groups from the figure for native Danes (21,600 DKK).

The age-standardized figures for Finland, compared to the Finnish native population, were drawn from page 178 of the full Finnish-language report by Suomen Perusta.

Note: the English-language summary of the study dates from 2015 and does not include employers’ social insurance contributions (~ payroll taxes), which constitute a central component of Finland’s public finances.
The full Finnish-language version of the study (originally published in 2015) was supplemented in 2019 with the inclusion of employers’ social insurance contributions (~ payroll taxes). This addition increased the difference between the net effects of immigrant groups and those of the native Finnish population, since employers’ social insurance contributions (~ payroll taxes) depend directly on wage levels, and the average wages of immigrants in Finland are considerably lower than those of the native population across most groups.

Why Age-Standardized Results Are Used in the Comparison of Realized Net Fiscal Effects

Age-standardized results are used in order to ensure that differences in age structure between the native population and immigrants do not affect the findings. At present, the age distribution of immigrants is generally younger than that of the native populations of Denmark and Finland. However, immigrants also age, and thus age-standardized results provide a more realistic picture of the long-term fiscal effects of immigration, even though the comparison here concerns only realized fiscal effects.

As Torben M. Andersen puts it¹² with reference to the Danish Ministry of Finance study:

“Immigrants have a different age distribution (being younger) than the population in general, and it is also changing over time to the large variations in the inflow of immigrants. To take account of this, the figure reports both the actual and standardized net contributions, where the latter assumes an age distribution as for the population at large.” (p. 10)
[…]
“Considering the standardized net contributions (allowing the age distribution to converge), it is seen that only immigrants and descendants from Western countries have positive net contributions, and they are lower than for ethnic Danes.” (p. 10)

Why Realized Net Fiscal Effects Are Compared to the Figures for the Native Population

There are two reasons, both of which relate to the fact that the zero point level does not influence the results:

1. Comparisons between countries are facilitated, since differences in the zero point (i.e., in the level of fiscal deficit across countries) do not affect the findings.

2. At least in Finland, it is not clear where exactly the zero point of net fiscal effects should be located. This can be seen indirectly from the fact that well-known Finnish institutions have produced highly divergent estimates of the size of Finland’s fiscal sustainability gap. If this sustainability gap were allocated to individuals in the Finnish population, the zero point of the net fiscal effect would differ depending on the estimate used. In Finland, there has also been some debate about the level of wage income at which an individual becomes fiscally positive, but no single objective answer has emerged from this discussion.

Note: The Danish study includes individuals of all ages, whereas the study by Suomen Perusta on realized fiscal effects includes only those aged 20–62, since its aim was to focus on the net fiscal effects during working age. Age-standardization should adjust for this difference at least partly. In childhood, however, the differences in net fiscal effects between groups are small (relative to working age). If the Finnish study on realized fiscal effects had included individuals of all ages, the three reported net fiscal effect figures would likely have been scaled down slightly by a multiplier somewhat below one. Since GDP per capita is higher in Denmark than in Finland, it would in any case be expected that the Finnish results are somewhat smaller than the Danish ones.

Lifecycle Fiscal Effects Compared to the Dutch Study by van de Beek et al.

In both the Dutch and Finnish studies, the lifecycle effects are discounted to net present value.

The Dutch figure concerning asylum seekers from the Middle East was taken from Table 6.1 (page 109) of the English-language research report. Strictly speaking, the figure refers to asylum seekers originating from “West Asia,” and the lifecycle effect includes both those who arrived as asylum seekers and their children (the second generation). The reported lifecycle effect is –€550,000 in 2016 euros, and it is converted from 2015 euros into 2023 euros.

The corresponding Finnish figure was taken from page 562 of the full Finnish-language report. It refers to the lifecycle fiscal effects of immigrants from Iraq and, as in the Dutch figure, also includes the lifecycle effects of their children (the second generation). The figure also takes into account possible emigration from Finland. The average lifecycle fiscal effect of one immigrant from Iraq is –€608,000 in 2015 euros, and it is converted from 2015 euros into 2023 euros.

Note: the study by Suomen Perusta also reports corresponding figures for those born in Somalia (page 546). For this group, the figure is –€812,000, which in 2023 euros corresponds to –€974,000 per person.

Note: Both the Dutch study and our own study account for the possibility of outmigration. The average lifecycle effect becomes even more negative if it is assumed that all individuals remain in the country permanently. For example, in the case of Finland, the results under this assumption would be –787,200 euros for Iraqis (p. 558) and –1,106,400 euros for Somalis (p. 542) in 2023 euros.

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1. Salminen, Samuli (2015): Immigrations and Public Finances in Finland Part I: Realized Fiscal Revenues and Expenditures. Published by Suomen Perusta.

The full Finnish-language report (updated in 2019 to include employers’ social insurance contributions, i.e., payroll taxes): https://www.suomenperusta.fi/wp-content/uploads/2019/10/Maahanmuutot-ja-Suomen-julkinen-talous-osa-1-toteutuneet-julkisen-talouden-tulot-ja-menot-v4.pdf

English Summary (from 2015, does not include employers’ social insurance contributions, i.e., payroll taxes): https://www.suomenperusta.fi/wp-content/uploads/2015/06/Immigrations-and-Public-Finances-in-Finland-Part-1-English-Summary.pdf

2. Salminen, Samuli (2019): Immigrations and Public Finances in Finland Part II: Life Cycle Effects on Public Finances of Asylum Seekers and Refugees. Published by Suomen Perusta.

The full Finnish-language report: https://www.suomenperusta.fi/wp-content/uploads/2019/03/Maahanmuutot-ja-Suomen-julkinen-talous-Elinkaarivaikutukset-pdf.pdf

English Summary: https://www.suomenperusta.fi/wp-content/uploads/2019/03/Summary_AsylumSeekers_lifecycle_effects.pdf

3. Jan H. van de Beek, Hans Roodenburg, Joop Hartog, Gerrit W. Kreffer (2023): Borderless Welfare State. The Consequences of Immigration for Public Finances. https://demo-demo.nl/en/

4. The Danish Ministry of Finance (2023): Økonomisk Analyse: Indvandreres nettobidrag til de offentlige finanser i 2019 - revideret version (september 2023). https://fm.dk/udgivelser/2023/september/oekonomisk-analyse-indvandreres-nettobidrag-til-de-offentlige-finanser-i-2019-revideret-version-september-2023/

5. See footnote 1.

6. See footnote 2.

7. The amounts in euros have been converted from 2011 euros into 2023 euros using Statistics Finland’s value of money calculator. The figures for Somalia and Iraq refer to those who immigrated to Finland at the age of over 15. “Former Soviet Union” and “Former Yugoslavia” are terms used by Statistics Finland for persons born in these countries while they still existed.

8. The amounts in euros have been converted from 2011 euros into 2023 euros using Statistics Finland’s value of money calculator. The figures for the Middle East and North Africa refer to those who immigrated to Finland at the age of over 15.

9. See, for example, the PISA results: “In Finland, the differences in learning outcomes between immigrant students and the native population are greater than elsewhere in Europe” (pp. 43–48) in the Finnish-language report: https://www.vtv.fi/app/uploads/2018/06/15103549/maahanmuuttajaoppilaat-perusopetuksen-tuloksellisuus.pdf

10. We have published a report (2020) in Finnish on the receipt of social assistance by immigrants. On page 77, the report presents the proportion of young adults who received social assistance during the year. The figures are provided both for the Finnish native population and for young adults of the same age from different immigrant groups.

In all groups defined by country or region of origin, the receipt of social assistance was higher than among the native Finnish population (“Suomi”).

While around 13% of 18–22-year-olds of Finnish origin received social assistance, more than half of second-generation immigrants with a background in the Middle East and North Africa did so within the same age group. Other second-generation groups, defined by region of origin, fell in between these two levels.

11. When using Statistics Finland’s value of money converter, the conversion factor from 2016 euros to 2023 euros is 1.20, whereas in the corresponding Dutch calculator the factor is 1.26.

12. Andersen, Torben M. (2025) : Migration and the Nordic Welfare Model, CESifo Working Paper, No. 11955, CESifo GmbH, Munich.