Transcript of the talk, from the video's captions. Auto-generated: speaker names in particular are unreliable. ======================================================================== # The Costs of Building Walls: Immigration and the Fiscal Burden of Aging in Europe Authors: Tiago Bernardino, Francesco Franco, Luís Teles Morais Discussant: None Video: https://www.youtube.com/watch?v=w6ObGDwelyg&t=358s ## Talk (00:05:58 – 00:37:11) [00:05:58] and we will move to our first paper. the cost of building walls uh immigration the fiscal burden of aging in Europe which will be presented by Luis Telis Mores from Arasmus University. So please [00:06:11] take it away Luis. >> Okay. Um just to check everyone can see the slides, right? [00:06:23] >> Yes, thank you. >> Okay, very good. All right. So, um good, uh good morning everyone. Uh good afternoon for those of you in in Europe like me. Um uh it's really a great [00:06:36] pleasure to to be here um at the at this amazing conference put together by the by the NBR and with the with the support of of other people. It's actually my second time in in an NBR conference [00:06:49] dedicated to demographic topics. So it's really good to see that these things are are really getting getting an interest from the profession and and picking up um and thanks for to Adrian and and Will and everyone else for for the [00:07:03] invitation. So my paper uh here today the cost of building walls immigration and the fiscal burden of aging in Europe is joint work with Thiago who's at the University of Lisbon and Franchesco at [00:07:15] Nova SBE also in Lisbon Portugal. I'm talking from Rodam at Arasmus University. [00:07:22] Okay. So the the starting point for for this paper um is basically two key stylized facts from demographics in in Europe but which also apply pretty much to advanced economies in general, the US [00:07:36] and so on. Uh the first one is aging and low fertility. Uh the combination of a large um baby boomer cohorts and and low fertility over past decades means that [00:07:49] we are currently in the middle of this very strong demographic transition to uh population with much more um older and retirement age people. The the key number just to have in mind is that [00:08:02] we're moving from around three working age people um per retired per older person in retirement age today to around two in in 30 years from from now. So it's a really stark change in the [00:08:16] population structure. And the second fact which is perhaps uh well known but maybe uh not not put together enough in this context of aging is the fact that these large waves we can we can say of [00:08:31] migration coming into Europe mostly from developing countries arrive by far predominantly at the early working ages. [00:08:39] So the as the the chart shows the line is the age distribution of the immigrant flow into Europe and it's really very concentrated in the ages between 20 and 30 35 and so of course this this begs the [00:08:53] question of how much can these young immigrants help relieve the tax burden coming from this aging population and this is kind of what we try to to tackle uh in this paper of course [00:09:06] focusing on the demographic aspect Um and what we do is basically on first we kind of take the the demographic model let's say seriously and so we try to to look at the the canonical let's say [00:09:20] population model that is used for projections and that is behind most kind of macro models that would have some demographics behind and we try to characterize the role of immigration in this context of an aging low fertility [00:09:34] population and then try to derive some some implications of that for the link between immigration and the fiscal uh implic costs of of aging. And then once we do that, we then take the these these insights to a basically generational [00:09:49] accounting exercise where we combine a full-fledged population projection that we developed with um data on the taxes and benefits of both natives and immigrants in the Euro area and then try [00:10:02] to see how the tax how the tax burden coming from aging changes with different scenarios for migration and we'll see hopefully that some of The insights from the demog demographic model will be [00:10:16] illustrated also in in this exercise to give already a preview uh of the results before the five minutes stop and your questions start. Uh I essentially from from looking at the demographic [00:10:30] model what we kind of unveil is that there is this mechanism that leads immigration in these aging populations to have really a lot of potential for fiscal relief. And the reason is basically that the native population [00:10:45] given low fertility is aging very very quickly and the dependency ratio is increasing quite quickly and with a kind of long run targets or long run let's say stationary dependency ratio that is quite high due to the fact that there's [00:10:58] low fertility and for this fact uh a regular immigration flow uh will generate a second kind of part of the population which is composed of immigrants and their descendants that has a dependency ratio that is very low [00:11:12] not just at at the beginning but also in the long run. And this cumulates such that the regular flow of immigration take has really drives the moves the dependency ratio of the full population [00:11:25] closer to the to the immigrants uh group dependency ratio. And so this can be this can has a lot of potential in terms of the dependency ratio when you increase migration a bit but there's decreasing returns because at some point [00:11:40] the the the population becomes to have starts to have a very high share of immigrants in total and you can only increase so much uh or reduce so much the dependency ratio through that. But the key consequence of this is that even [00:11:54] if immigrants are relatively lowkilled and make ne negative contributions over the full life cycle, they can still reduce the average burden for everyone let's say by reducing the dependency ratio for for in the f in for several [00:12:09] decades. Um and then we take this to to this accounting exercise with Euro area data where essentially what we do is our baseline and our key comparison is between keeping the migration flows 20 [00:12:22] of 2019 which is our base year for our analysis in terms of both its intensity and the characteristics of migrant. [00:12:30] uh we compare a scenario where you keep that constant for the future with a scenario where you would shut down migration and there would be no more immigrants coming in. And what this reveals is that the tax increase, the [00:12:45] permanent tax increase necessary to uh ensure sustainability of the government budget given the benefit that spending is increasing due to aging is reduced by the presence of this regular immigrant [00:12:57] flow by around 1% of GDP per year. So it's something like 20% of the of this tax increase needed for sustainability that is reduced because of the presence of migrants. And so this benefits also [00:13:11] natives who um have are are part of the resident population that has to deal with with this with this physical aging. [00:13:20] And the we do this back of the envelope population that comes out and it comes out that for the average reduction in this tax bill per year is around €850 [00:13:33] for the average 30-year-old native. And this again comes despite the fact that immigrants coming into Europe in the data have lower skills and therefore make lower net tax contributions than than natives. Then we also show at the [00:13:47] end hopefully if I have time that this is the average picture for the Euro area but there are then large differences across countries depending on both the characteristics of immigrants and of their own kind of demographic process. [00:14:02] Now, in terms of contribution, the way we see this paper is >> Let me just ask since you've gotten through the introduction, if anyone wanted to uh jump in with any clarifying questions at this point. [00:14:15] >> I I just have a quick question which is um uh there was a study by a couple decades ago by uh Alan Arabach and Phil Oropoulos about immigration into the US. [00:14:27] I think the the present value fiscal cost was basically zero or gain was zero. Uh this was like a fiscal gap accounting and uh it incorporated the welfare side as well as the tax side. I presume you're doing both. [00:14:41] >> Yeah. >> But um why you know can you give us a quick idea why the welfare benefits to the immigrants who are going to have a lot of children some of whom are going to be you know older parents depending on who's being brought if they're all [00:14:53] middle-aged people coming in. I can see what you're getting, but I I'm not quite sure why the welfare cost the the welfare benefit costs don't exceed the the tax gains. [00:15:06] So we I mean the to to that I can't we take the data as given when by measuring the the per capita taxes and benefits of uh immigrants as well in in your area in [00:15:19] in this period let's say and what the the exercise reveals is the combination of their taxes and benefits with the age compositions of immigrants is such that even though their their net contributions are negative they still [00:15:33] reduce the adjustment on average for all the residents and I'll I'll make this this distinction more clear in a few slides like how how how why is it like why is this adjustment still lower even though their uh contribution would be [00:15:47] negative over a full life cycle >> that's very interesting yeah >> yeah okay thank you for the question all right so I'll I'll if there's no more questions I'll I'll move on um just very quickly in terms of contribution of [00:16:01] course there's a lot of papers looking at the the fiscal effects of immigration. Uh one um Larry just mentioned before there's now more recently there was in the early 2000s a lot of papers and now and now this kind of has picked up again. Uh a lot of [00:16:16] macro papers that do both exercises like this and also with more um rich kind of models including in general equilibrium to see kind of the effects of of immigration in advanced economies. And then there's also a literature more [00:16:29] micro looking at the contributions of immigrants depending on their characteristics even some indirect effects with great work one more recent paper also with structural estimation trying to capture also second order [00:16:41] effects at the the micro level. Um what we do here as we see it is first we kind of tease out this this mechanism that we found was a bit hidden in the dynamics of demographic models that is kind of [00:16:55] was there already in kind of the the the demographic projections behind some of these papers this kind of cumulative effect of immigration flows over time and this shows which I I think is is a bit different from a lot of the the [00:17:09] results in the literature so far why low-skilled immigrants even if they pay less taxes and receive more uh benefits uh per capita than natives can still reduce the the the the fiscal the [00:17:23] average fiscal cost of aging for all the the taxpayers. And then we quantify this a bit with our exercise for the Euro area which is a case where you have this relatively rich countries where immigration coming in is is low skilled [00:17:37] and still this this effect is is there. Okay. So the the first part will be to to look of it at the demographic model and and try to to be to be more precise about this this this conclusions that we [00:17:50] take from from looking at it. And so what we do in in the paper is we start with the simple version of the model where there's only three generations young, a working age and old. And there's going to be two different [00:18:02] lineages that we run in this model. One composed of the natives and one composed of migrants and they're descendants. [00:18:11] And when you look at the the the the population, there's going to be these three generations, and there's going to be a constant immigrant flow that's coming in every period. Um, in the the simulation that you'll see next, both [00:18:25] natives and migrants have fertility below replacement, but this this extends to the case where migrants also have fertility above replacement, which which is is a common concern. And our focus in in what I'll say next is in the [00:18:38] dependency ratio which is the kind of approximate measure to these fiscal costs that we're we're worried about. Um okay and so trying to to be relatively quick essentially first of all there's [00:18:51] this long run result that is actually kind of um textbook from from demography we found which is that a population of this form has this kind of stationary state which in demography is called a stationary through immigration [00:19:06] population and what what does this mean? It means that the native population with fertility below replacement perhaps obviously is headed to extinction. The the total population would go to zero. [00:19:18] Uh what happens with such a population is the dependency ratio does not explode but it increases and eventually converges to the stationary dependency ratio that's quite high that's relatively high compared to to to a [00:19:31] normal let's say population a stationary population that's not going to extinction. The stationary to through immigration population means that a constant flow of immigrants sustained a [00:19:44] stationary population meaning that in the long run has zero population uh or has some sorry constant population growth and some fixed age structure or some stationary age structure. And it turns out, this isn't super important [00:19:58] for for us, but it turns out that actually the age structure of this stationary through immigration population is the same regardless of how intense this flow of migrants is. [00:20:10] There's going to be some stationary dependency ratio associated with this immigrant population that is lower than the aging population that's exposing. [00:20:19] Now, of course, what we care about here is not the stationary state, which is kind of 500 years from now in in in an empiric application, but rather the transition, right? And so, we look a bit at what happens to the to the dependency [00:20:32] ratio in this population over a demographic transition and how it changes with the intensity of migration. [00:20:39] And essentially the key thing is that the dependency ratio of the total population is going to be a mixture of the immigrant linage and the native linage dependency ratio. And it so [00:20:52] happens that of course this share of of uh that the the sorry the weight of migrants in the total dependency ratio is going to is going to be is is going to increase with decreasing return. It's going to be convex as you increase [00:21:07] immigration and it's going to decline. So when you when you increase migration over over the transition the dependency ratio goes down but it starts by going down a lot and then declines uh over time. [00:21:22] This is just a simulation with in this simple model to to illustrate a bit more the the result. Essentially this is the dependency ratio over time. The red line shows a dependency ratio of the native population that is going to zero. The [00:21:35] green line is showing the immigrant population. So the dependency ratio starts very low and then converges to a relatively normal level, let's say. And then the blue lines are the mixture. So the total population depending on how [00:21:49] intense the immigration flow is. So how quickly immigration is coming in and replacing in some sense the the natives. [00:21:56] And so what you see is that increased imig immigration essentially affects the dependency ratio significantly more at the beginning and then with decreasing returns uh over time. [00:22:08] >> That's a clarifying question here. So you're just you're assuming that these migrants are coming in throughout this transition always at the same age, right? [00:22:16] >> Yes. >> Isn't there kind of a concern that you know the rest of the world ages and then also the the new migrants 20 years from now they'll be older? [00:22:24] >> Absolutely. So, so but the thing is that's that's another point why the steady state here is not really super important right because uh in 50 years the characteristics of immigration will probably change a lot we use this [00:22:39] stationary state here just as a tool to see what happens in the transition so say in the in the next 10 20 years as you increase immigration what's happening what what happens in terms of the dependency ratio and fiscal cost uh [00:22:53] which of course has a limitation but But that's that's what we're we're trying to say. [00:22:59] Um, okay. But of course, what we we're looking for is to draw lessons for for the economics of this and for for for the fiscal burden of aging. And the the our um approach here is not new. We use [00:23:13] the the tradition of generational accounting that Larry H of course started a long time ago. Um and the idea is that you apply some fixed fiscal profiles to each of these demographic groups. So age and country of birth in [00:23:28] this simple example. Um you take the intertemporal budget constraint of the government and you kind of assume that the initial debt plus all the future spending has to match the all the future revenue in in discounted terms [00:23:42] eventually. And you what the the the way we we kind of use this is we we focus on this term theta that you see here at the bottom. It's basically the adjustment factor that restores balance in this in [00:23:56] this uh uh intertemporal budget constraint. Which means that as long as so if the if the expected spending plus debt are is larger than the than the taxes, this theta is going to be [00:24:09] positive and it represents in some sense the permanent tax increase that would have to be uh imposed given constant uh age and demographic profiles of revenue and spending such that you restore fiscal balance. And this is going to be [00:24:24] our kind of measure of the the fiscal burden of aging. Now just um a last point on this um what we care about of course in the end is how this theta changes with migration. Uh and you can [00:24:38] decompose this in in the contribution of natives and immigrants where the the theta is going to depend on the initial debt and the expected revenues and expected implicit liabilities meaning future spending attributed to natives [00:24:52] together with the spending and liabilities attributed to to migrants which those are the ones that are going to scale with the size of this immigration flow. And what what turns out is that even if the even if there's [00:25:07] a implicit deficit let's say in the net contributions of migrants which is going to be the left hand side of this inequality here. So even if the discounted future spending on migrants is higher than the discounted future [00:25:22] revenue that they bring in. As long as this is lower than the implicit deficit of all these things together from the natives, increasing immigration still lowers the overall adjustments that [00:25:35] resident taxpayers will have to have to pay, let's say. And this is kind of uh uh one insight of why even if immigrants make negative net contributions over the full life cycle over or over their life [00:25:47] cycle they can still reduce the the burden in the sense of the adjustment cost for all resident taxpayers. [00:25:56] >> Uh Ron did you want to with your with your question? [00:26:00] Uh yes. Uh what assumption do you make about the fertility of immigrants uh over time? Do you allow for convergence towards the fertility of the [00:26:13] native population which is observed in the US so that over a course of a couple two or three generations they have the same >> uh yes fertility as everyone else. [00:26:25] Similarly for educational attainment. Maybe Ron if I do you mind if I defer that to slides because I'm gonna talk the full exercise and then >> Absolutely. [00:26:34] >> Yeah. Okay. Thank you. >> Um okay c can you just remind me how much time I have will >> you have about 10 minutes left n >> perfect I think that should should should work. Okay thanks for that. All [00:26:48] right. So, uh in the rest of the talk I'm going to show uh very briefly these full population projection that we derive on the full version of the model for Europe and then their their fiscal implications. So essentially it's the [00:27:01] same model as you saw before but now with the full like kind of a 100 years of uh of of age and the distinguished we distinguish population by groups of gender education level and birthplace [00:27:14] meaning natives non born in the EU versus people not born in the EU and essentially the the the exercise is to start off with to use sorry the data on the migrants today and assume that these [00:27:28] are going to be fixed and are going to be the same coming in every year in the future and the size of this immigration flow in the baseline the same as in 2019 which is our our our starting point. [00:27:41] Um the I won't spend too much time but essentially the starting point of course is that the immigrants that are that are already uh in the in the U economy and that are going to come in are much younger than the than the than the [00:27:56] natives but also less educated. So this is going to reduce let's say their their negative contribution to have a just to give you an idea of what's behind the scenes in this population projection the the share of immigrants or in in the [00:28:11] sense people who are coming in uh are increases a lot over time because as in the simple example before the native population is declining so much so that by 2100 you end up with around 50% of [00:28:25] the population composed by non-EU migrants and descendants. Now, of course, I'm not trying to be controversial with this. This can't be really be taken literally. If you did the same exercise in a kind of back test for the US right now, you would end up [00:28:39] with very similar, if not higher numbers of immigrant population. Of course, in practice, this means a population that is assimilating that is born that is a citizen of of the EU that is uh [00:28:52] potentially like forming um forming households with EU citizens. So it's not to be taken literally but it it does mean that for our population projection the role of these immigrants and descendants does have this like is [00:29:05] increasing the share a lot in in the population and of course the dependency ratio of this group uh is much lower and and remains low um as the projection goes. [00:29:16] Okay. Um here I I kind of skip but I don't want to miss uh Ron's question. In terms of fertility rates, um the fertility of immigrants here is of course taken from the data at the beginning and it's much higher compared [00:29:31] to the UN natives. But we use the same assumptions that Euroat uses in their population projection where they assume convergence to um the same level as natives. [00:29:44] um which is but we we in the paper I won't have time now but in the paper we have robustness checks where we keep this fertility high and it doesn't change the the results too much um because it turns out that the effect of high fertility of immigrants would come [00:29:57] much later and and so it it has a a smaller role in the in the fiscal um okay so this this is the framework that I showed before just to to make clear that everything we all the [00:30:11] computations we make for the spending and revenue of immigrants is coming from um the from data on how um residents born outside the EU are contributing in [00:30:24] terms of taxes and and spending to to the budget. This comes from different uh survey uh sources in in the EU uh that we combine to to in kind of these flexible regression framework to to [00:30:36] estimate these um spending and revenue by by age. This is the the full picture. [00:30:43] It's of course nothing new that uh people uh make net positive net contributions in their working ages and negative net contributions in the young and old stages of life. Uh the key thing [00:30:55] is that when you compare the right hand side which is the immigrants with the natives on the on the left hand side their contribution is far lower in the working age. they pay uh significantly [00:31:08] less taxes per capita and then in the working in the old age they their their benefits are slightly lower mainly due to pensions but in net terms their contribution over a full life cycle is [00:31:23] still lower and so this is what I summarize in in this slide where we combine these fiscal profiles taken from the data with the the with the population parameters and what you see [00:31:35] is that in the first column over a full life cycle the net contribution of an immigrant given this data would be minus €10,000 which is double the negative contribution of natives of a native [00:31:49] newborn sorry so it means that this means that the tax policy is unbalanced in in this sense so a native newborn is still making a negative contribution an immigrant would make a far more negative [00:32:01] net contribution when you take uh but the Key comparison of course is not this one but it's the comparison of a native newborn with an immigrant at the ages where they come in. And here this is the [00:32:14] second column the second row. What you see is that their contribution is negative but lower than that of a native newborn. So it means that this adjustment factor which ends up kind of averaging out uh people's contribution [00:32:28] goes down when you have more immigrants because even though they're they have a negative contribution it's smaller than those of than that of newborns. So they reduce a bit the average rebalancing that everyone has to do. And of course this has a lot to do with the fact that [00:32:43] by im immigrants coming in later they don't um the the first first generation immigrants are not um do not generate childhood spending like healthcare and schooling and so on. [00:32:57] >> And so this three minutes left just time wrap up. Thanks. [00:33:02] Um, and so this summarizes this average result for for the Euro area with this exercise as I said in the beginning that compares a no migration scenario with this baseline where you keep the flow of 2019 coming in every year. And the [00:33:17] difference is basically between a 16% adjustment without immigration and 14% uh with this immigration flow. So this means that immigration to the immigration today or in 2019 as this has [00:33:31] been a few years is reducing the fiscal burden of aging for uh European taxpayers by around 1% of GDP um per in this in this yearly sense uh which through a back of the envelope approach [00:33:45] would tell you that in annualized terms it's around 850 um euros per year of taxes for the average um European uh worker. [00:33:57] Um I will skip this in the interest of time. I just want to to to show the heterogeneity in countries like what I was showing you before is the is the result for the average of the Euro area. [00:34:08] Okay, where immigrant immigration has this negative and with decreasing returns effect. When you look at the picture across countries, it varies quite significantly. What I'm showing [00:34:21] here is not the rebalancing increase per se, but rather the impact of migration. [00:34:27] So it's comparing uh for each level of migration how this adjustment factor changes compared to uh the zero migration uh scenario. And so the black line is the EA average. And what you see [00:34:40] is that there's a lot of differences uh across countries. Um some countries immigration does not help in this sense and on the contrary um actually harms in the sense and the the reasons for these differences of course can are are [00:34:54] multiple multiple things are are coming into this accounting of course first of all the age gap between immigrants and natives in some countries immigrants are not this like prototype of like young working age and so they don't this [00:35:08] effect is not present in other in other cases the aging process sorry the aging process of the population namely Lithuania for example over there uh is not the same as in the average European Union country and so that this effect [00:35:22] doesn't really matters and then finally of course if the difference in wages between migrants and and and natives is very extreme or if there's an extreme difference in the tax policy such that migrants really make very small [00:35:36] contributions this can offset the the demographic effect and then there isn't this benefit of of immigrants is um coming. [00:35:45] Okay. So, sorry to rush uh but I'll conclude in a in a minute. Uh so hopefully uh with with this paper um we've uh shown shown you a demographic [00:35:58] mechanism in aging populations where there's this constant stream of working age immigrants that contributes to to their role in relieving the fiscal burden of aging. uh the dependency ratio [00:36:11] goes down as you increase immigration flows. This of course has diminishing returns. So it's not like a perfect solution. Uh but yet it does show you that immigrants can relieve the fiscal burden of aging even if they are low [00:36:24] skilled. uh we did this exercise in Europe that um illustrates a bit this this mechanism and shows that in a in a continent in this case or in a in a region which is marked by significant [00:36:37] aging process and lowkilled immigrants they can still relieve the fiscal burden of aging for foreign native taxpayers. [00:36:44] Of course, the the caveat in this is that there's very large differences across country than a kind of more broader broader picture take from this is that it means that agreeing in Europe [00:36:57] for a common migration policy is this is one more factor making that very difficult because indeed the benefits for the public purse are very different for for different countries. Thanks so much again for the invite and for your attention. I'm looking forward to to ## Q&A (00:37:11 – 00:48:15) [00:37:11] your questions and comments. >> Yeah, fantastic. Thank you for staying right on time. So, we have a few minutes for discussion. If if folks uh want to raise their hand, wave their hand or uh you can just unmute if you want at [00:37:24] Larry. I see your hand raised. Yeah, I I found this very uh insightful and you know um I I think a good analogy would be if you look at the US uh the most recent study I I just completed with the [00:37:38] Bank of Italy shows that the US has a fiscal gap of seven and a half% of GDP uh going going on forever. Um and the uh [00:37:49] and Italy has a 4% of GDP fiscal gap and it's largely because uh their uh off the books liabilities are much smaller. um even though they're on the book [00:38:03] liabilities are larger somewhat larger as a share of GDP uh they've had pension reforms and health you know healthcare spending at 6% of GDP not 18% 10% of which is federal but in our country but [00:38:17] uh if you think about just um merging Italy and the US so Italy becomes our 51st state and then you think about the recomputation of the fiscal gap it's going to be somewhere between four in 7 [00:38:31] and a half% maybe it's going to end up at 5% or 6%. But I think that's the the key point you're making which is that um getting in effect a country a group of people to come you can call them a [00:38:45] country uh where on average they're doing better means that the adjustment for everybody else has to be can be smaller and I think that's a a really uh very clever and important and even [00:38:57] brilliant insight. Thank you. Thanks for the comment. Thank you very much. [00:39:04] Um yeah, I I don't know if um so I I I I'm afraid I I I don't know in detail your your project with the Bank of Italy people. Um the one quick kind of [00:39:17] feedback that I can give is that I mean for sure we're only taking um the explicit let's say public debt in into account. We're not looking at like these [00:39:29] we're we're not looking at um uh like guarantees and other other things like this that increase a lot the the liabilities of of governments with in a in a in a in a hard to measure way. Of [00:39:43] course the exercise and maybe I can use that to show this slide that that I skipped. We do of course consider the the implicit liabilities that just come from the the the demographic change and from the observed tax policy. Right? So, [00:39:56] so this this decomposition here that we do is just showing in contributing to this this adjustment factor and and this rebalancing tax increase, how much comes from the existing public debt stock and [00:40:10] how much comes from the the aging part, meaning the interaction of population composition and the the the fiscal profiles. And just from from this from this point you can see that it does vary [00:40:23] a lot over over the year area because for the Eurary average at least in 2019 public debt was was significant but it's a small part compared to these kind of aging related increases in in spending. [00:40:37] Uh in other countries like Greece of course for example the the role of debt is is much larger or Italy indeed um where where the public debt is also quite large. uh and you see that the but [00:40:50] the the the thing that we we as from from this paper like to highlight is that in fact in for many countries the the role of migration in reducing the fiscal burden of aging is really in the same ballpark as those as those [00:41:03] components. So you see in Portugal where I'm from maybe this is a biased view. So so take it with a grain of salt but the the the contribution of immigration is actually higher. So it more than compensates for the for the aging [00:41:16] related spending uh growth and then an implicit liability in that sense. But of course the the factor is still positive because there's this large uh historical debt burden. And so, [00:41:29] >> so Luis, if you can just wrap up this dance because we have several other questions lined up. [00:41:34] >> Yeah, absolutely. I'm I'm not sorry. Thank you. [00:41:36] >> Okay. U Adrian. >> Yeah. No. Uh, thanks. It's super interesting. I just wanted to follow up on this question of the age of the migrants because it looked like, you know, you continue, you know, you have a 20, you know, 100 years migrundyear [00:41:50] transition where you're continuing to have migrants coming in at the same age. [00:41:54] and and it sounds like your basic point totally survives even if you increase the average age of the migrants because it's it's basically well I'm I'm bringing in migrants at this time of the life cycle where the present discounted value is like less negative than what it [00:42:08] is for a newborn and so I guess just thinking about robustness here you could look at either what uh people forecast will be the age distribution of migrants or even just increasing the migrant age distribution in line with say the [00:42:21] average age in the rest of the world And you know I I I don't think it changes your conclusions but it would be interesting to do that. [00:42:32] >> Thank you. Noted. I appreciate that. Um yeah, maybe I'll let more questions so so so that I don't run in over time and then I can follow more. [00:42:42] >> Yeah, Jim, why don't you jump in? >> Sure. Uh really interesting question on the slide that you used in response to Ron's question which got us thinking about the very interesting comparison of the net fiscal cost of an immigrant at [00:42:55] age 30 versus a native born at age zero. Um that I just data question about the immigrant data there. Is that an average over all of the immigrants to the to to Europe? And you know if you were able to [00:43:10] disagregate this I know in the US that you know the difference between high-skll immigrants and and the average immigrant is is large uh you know how sensitive to the is this calculation and it it's picking up on you know some of the questions Larry was asking earlier [00:43:24] how sensitive this is this to if you could stratify the immigrant pool and and begin to take it apart and if it's a long question just feel free to leave it for an email exchange later. U maybe the the the quick answer is that it is very sensitive. Uh and I believe if I'm not [00:43:38] mistaken we have that in the appendex of the paper somewhere. Uh the the short answer is that so we have these graphs that you see here which decompose the the our kind of tax profile for immigrants and and natives also by [00:43:53] education level. And of course you see that it changes dramatically mainly. So it's not not as much as you think because since in Europe you have public social security the higher taxes are partly offset by higher pensions but it [00:44:07] still becomes positive for for high skills. [00:44:11] >> Great. >> Great. Thank you. With let's uh let's take two more minutes of discussion. So two more quick questions Rainer and and then Ron. [00:44:19] >> Yeah. Thank you for this interesting presentation. I I would like to know to what extent the type of immigration matters. So whether there is um u immigration for work purposes or um [00:44:33] asylum seekers and refugees because this has been a major topic in the political arena. Do you have any numbers on how their contributions over the life cycle matter? Are your results sensitive to this distinction? And uh [00:44:48] would you would you say that you have political suggestions for for political actors? [00:44:56] Um I I maybe So there's another question. Let me take it and then and then I and then I can I can answer both if that's okay. [00:45:05] >> So Ron, why don't you jump in with your question then? [00:45:10] >> Yeah, the very short answer right is that we can't distinguish refugees from from from regular workers. So it's difficult [00:45:24] to say much. Ron, I think you're you're muted. [00:45:28] >> I've unmuted. >> Okay, we can hear. [00:45:31] >> There were a couple of very detailed studies along similar lines to the ones you're reporting done for the US in the mid 1990s and then again uh around 2015 [00:45:45] or 17 National Academy of Sciences reports. Now those found yes a positive effect of immigration on average but uh [00:45:57] very small on a per taxpayer basis and there the lowkilled if I remember correctly had a negative uh fiscal impact but completely dominated overall [00:46:11] by the contributions of medium and high-skilled and u at that time of course the US had fertility close to replacement and the long run aging was much less um [00:46:24] projected was much less severe than in Europe. And I think that maybe contributes to that difference. And the other is that um pension issue is far less uh serious in the US than it is in [00:46:39] Europe for various reasons. And I just wonder if you have any ideas about uh this comparison and also suggest you look at those National Academy of Science reports. [00:46:52] Thanks. >> Um should I answer quickly, Will, before you wrap up? [00:46:58] >> Uh you want to do the 30 second answer and then we'll move on. Thanks. [00:47:02] >> Okay. Um so very quickly to to Ron um we do think that one of the the so this paper only makes sense because of this change in our understanding of low fertility because like the seminal paper [00:47:17] in this topic which is by by Sheet Torres Leon in the in the early 2000s indeed there the assumption was replacement fertility in the US in the in the long run and and and there this [00:47:30] none of this kind of holds because that this this demographic almost dividend from immigration that you find here is really only because of low persistent fertility in the in the native [00:47:42] population. But we think that given that everything we know now kind of suggests that that's a permanent feature and not a transitory shock like it means that this is kind of relevant. Um but I think [00:47:55] that we can do more to still kind of um dis so to separate the two things like where really isolate this this demographic part from the contributions of of high and low skill immigrants. I think it's something to to be done and [00:48:10] you're right that we have to look more carefully at the academy reports. Um so thank you.