The complexity of the nature of contribution by the migrants makes the assessment of the net fiscal balance/contribution difficult to make as it is dependent on a range of determinants like earning potential, design of tax and benefit system. The immigrant’s net average fiscal balance is positive in developed countries, but it is lower than that of native workers as indicated in recent studies (Oecd, 2013). Studies have also shown that for advanced countries, public finances are not impacted by the immigration and its value is usually less than ±0.5 percent of GDP (figure 15). Also migrants who are young or old in age show negative fiscal balance. In developing countries, the undocumented migrants are usually deprived of public utility services and tax contribution is also limited. Hence, their net fiscal balance is small.
In the recipient countries with aging population, the immigrant can help reduce long term expenditure. Old age dependency ratios can be reduced by allowing for increased migration according to recent studies conducted by the IMF. Therefore, by 2100, a reduction of 2 percent of GDP in age is related expenditures (Clements et al., 2015)
Increased immigration can positively affect the economic growth of the recipient countries by supplying the needed labour force at lower wages and boosting investment by higher returns to capital. Indirect effects of immigration is also seen in the countries with aging and shrinking population, whereby increased immigrations reduce long term expenditure and dependency ratios as the native workers are older than the migrants. Technology can progress by the immigration of highly skilled migrants and hence it lifts the productivity growth. There is insufficient empirical evidence on the growth impact of migration, but recent studies on model simulations indicate that a 5-10 percent effect of immigration on the growth of economy of recipient countries (Giovanni et al., 2015). Studies have also shown that an adverse effect is likely to take place on OECD countries in the absence of migration (Oecd, 2015).