Immigration and the welfare state

It's becoming a commonly accepted misconception that immigration makes the welfare state unsustainable. However, the data tells a different story: the autonomous communities with higher immigration rates have higher per capita tax and social security revenue than those with lower or no immigration. This is obviously not because the workers are immigrants or not, but because the communities with high immigration rates have higher employment rates, which they wouldn't have achieved with the native population alone.

Therefore, the welfare state in autonomous communities with higher immigration is more sustainable. In fact, in many autonomous communities with low immigration, the welfare state is simply unsustainable without the funds these communities receive from the former.

Against this data—easily verifiable by consulting statistics from the INE (National Institute of Statistics), the AEAT (Spanish Tax Agency), and the Social Security system—the pyramid effect is often argued: the idea that immigrants may contribute today, but tomorrow they will receive more than they have contributed. However, given that the birth rate remains higher among the immigrant population, their future ("pyramidal") contribution will also be greater than that of the native population. In other words, their children will pay their pensions and part of those of other parents, especially if the receiving society is skilled enough to ensure that these children have jobs and salaries comparable to those of the average population.

This would avoid the second falsehood: that low value-added employment—which employs low-skilled immigrant workers—increases GDP but not productivity or GDP per capita, which is ultimately what matters. This assertion also requires significant qualification.

On the one hand, in Catalonia, the population over 65, which largely ceases to contribute to GDP, has increased by 20% in the last 20 years. To absorb this aging population and simply "maintain" GDP per capita, a 10% increase in output per worker is necessary. Furthermore, GDP per capita has indeed increased during this period: by nearly 9% in real terms (adjusted for inflation), according to Idescat.

In reality, what makes maintaining the welfare state difficult is the aging population. But, fortunately, no one is yet advocating for mass euthanasia after a certain age.

On the other hand, if we could separate the GDP per capita of the immigrant population—which is currently below average, given that they tend to occupy lower-value-added and lower-paying jobs—we would see that that of the native population has increased even more. This is obvious, but to be able to compare it and track its evolution, it would be useful to have this statistical information, as other countries already do.

Immigration, which is often a misfortune for the immigrant himself, is certainly a socially complex phenomenon that requires management. better than the current situation. But in economic terms, it's usually a good deal for the receiving country, even though there are social strata for whom it represents difficult-to-digest competition. In general, it's precisely those segments of the population formed by previous waves of migration who haven't reached a higher level of education and training than the new arrivals that are most difficult to accept.

It is also true that, within the common financing system for Spain's autonomous communities, the "business" of immigration is more profitable for those with a fiscal surplus than for those with a fiscal deficit. This is because, as we have seen, greater immigration, which leads to more employment, also generates more tax revenue; and greater revenue means greater transfers to those who collect less. Thus, immigration not only finances the welfare state of the receiving region, but also that of regions with low employment and tax revenue. But this is another topic, one that would warrant a separate article.