Immigration and net transfers within the public sector in Denmark

This paper studies how immigrants affect public finance at different levels of government in Denmark. Non-Western immigrants are not well integrated into the labour market, many are outside the labour force altogether, and unemployment is high among those in the labour force. The lack of integration means that the revenue from taxes paid by immigrants is lower, and the transfers received by the immigrants from the public sector are higher, than for natives of the same age. The net transfer to the public sector is negative but effects differ between different parts of the public sector. The effects are most negative for the municipalities, who therefore have incentives to attempt to redirect immigrants to other municipalities.