The Costs of Building Walls: Immigration and the Fiscal Burden of Aging in Europe

Age Distribution of the Population Stock and the Immigration Flow to the EU in 2019 Note: Each gray bar represents the percentage of the resident population in the EU belonging to a specific age group in 2019. [...] We also discuss the population projection that we use to forecast the counterfactual evolution of the primary balance and, ultimately, to assess the role of immigration in the public finances balance. [...] 12 When we decompose the primary balance by age groups, we find that the young and the elderly populations are net receivers of the government budget, while the working-age population is a net contributor to the budget. [...] Since the debt’s value is much smaller compared to the size of the present discounted value of the stream of revenues and expenditures, changing D increases both the numerator and the denominator essentially in the same proportion. [...] In Appendix E.2, we compute θτ for different assumptions of the fertility rate of the immigrants as well as the frontier between the imbalance factor and the level of migration.