In Switzerland, there is currently a discussion on taxing immigrants (well make them pay a fee, not really a tax: “Zuwandererabgabe”) as a means to
reduce regulate immigration. The intuition is straightforward: immigrants cause costs to the country of destination (infrastructure, environment), and we can recover at least some of the expenses from them.
Reiner Eichenberger, economist at the University of Fribourg, suggests to tax immigrants (refugees excluded) between CHF 12 and 15 every day (he likens this to a visitor’s tax tourists pay) for the first 3 to 5 years – that is around CHF 5000 a year. This does not affect the freedom to move, but introduces costs which he argues would reduce immigration.
George Sheldon highlights that such an immigrant tax would most likely be covered by employers, not the immigrants. Immigrant workers can choose between many countries (of destination), while the employers need a worker in a particular location: this gives the immigrant worker more power in negotiating who covers a potential immigrant tax. An immigrant tax is also an opportunity cost, so immigrants are likely to stay longer – which actually increases the share of immigrants in Switzerland.
In this debate, alternative payments are also discussed, such as deposits. What lacks, however, is any empirical data on how immigrants are likely to react. Well, here I present data from a non-representative survey I conducted in April 2011 – when this idea of taxing immigrants was discussed last time. The survey covers university students in Germany (Osnabrück) and Albania (Tirana), and asks about plans to emigrate. It also asks whether the prospect of paying a deposit or a non-refundable fee would deter them. Let us be clear that these are survey questions, so we can only capture what they say, not actual behavior; and university students may be a particular group. There are 122 responses from German students, and 41 from Albanian students in the data, studying many different degrees.
The intuition behind the case selection was to capture two different immigrant populations – taking the perspective of Switzerland. On the one hand, there are the typically highly-skilled immigrants from Western Europe. They constitute a group of immigrants often considered benevolently, although not unreservedly so. On the other hand, Albanians are often regarded with suspicion in Switzerland, regardless of their qualification. Cultural differences tend to be highlighted in popular discourse. The expectation is that both in Germany and Albania, university graduates are a population of potential emigrants, although it would be wrong to expect everyone considering emigration.
The survey included a series of questions asking respondents what is important in life (family, friends, politics, money, religion), and a number of attitudinal items. These attitudinal items capture whether men should be privileged over women if jobs are scarce, and if the native population should be privileged in the same situation.
In the absence of data, what could we expect? On the one hand, from a purely economic perspective, it can be expected that migration fees and deposits are a deterrent to migration. Other things being equal, a rational profit-maximizing individual will choose a different country of destination, where no such migration fee is levied. At the same time, the presence of a migration fee or a deposit could act as an important signal to potential migrants: that they are not welcome, or only welcome under specific circumstances. The migration fee in this case acts as a symbolic rather than economic disincentive. In either case, the expectation is that the presence of migration fees and deposits would influence migration decisions.
In economic terms, there is a difference between a migration fee and a deposit. A migration fee is non-refundable, and can be regarded as an (artificial) opportunity cost. A deposit, in contrast, is refundable under certain circumstances. It can act as insurance against costs to the country of destination – particularly in relation to crime and efforts to extradite unwanted immigrants. The willingness to pay a small deposit is expected to be higher than the willingness to pay a migration fee and a high deposit.
58% of respondents have thought about emigrating after their studies. Of these, however, 63% have no concrete plans, and only 16% have gathered information. 25% have considered moving to Switzerland, 75% have only considered different countries.
In Germany, 61% of respondents have thought about emigrating after their studies, of which 69% have no concrete plans, and 11% have gathered information. 30% have considered Switzerland.
In Albania, 51% of respondents have thought about emigrating after their studies, of which 43% have no concrete plans, and 33% have gathered information. 10% have considered Switzerland.
What is important to choose a country of destination? 73% mentioned job opportunities, 36% career opportunities, 28% friends, 16% the salary, 36% living costs, and 16% migration costs. For 57% language is an important criterion. 38% think they need a concrete job offer, and for 36% their partner is a deciding factor.
How important are migration costs? None of them thought that costs were irrelevant, but fewer than half (47%) consider these costs central or rather central.
Would an immigration fee affect your choice of country? Let’s look at the percentage of respondents stating that such a fee would affect their choice of country, beginning with refundable deposits:
€1,000: 18% think this affects their choice
€5,000: 43% think this affects their choice
€10,000: 78% think this affects their choice
€20,000: 84% think this affects their choice
So yes, migration fees seem to affect the choice of country, but only the larger amounts can deter the majority – and for 16% paying €20k is not enough to change their minds…
How about non-refundable fees?
€1,000, non-refundable: 42% think this affects their choice
€5,000, non-refundable: 73% think this affects their choice
€10,000, non-refundable: 89% think this affects their choice
€20,000, non-refundable: 94% think this affects their choice
Unsurprisingly, non-refundable fees have a stronger “effect”, with lower amounts already having a significant impact. Given the general opportunity costs of moving to another country, the many respondents deterred by an additional €1,000 suggests that the symbolic component of such migration fees can be substantial – and migration fees are not only part of an economic cost-benefits analysis.
Researcher, Swiss Forum for Migration and Population Studies, University of Neuchatel and Visiting Research Fellow at the African Centre for Migration & Society, University of the Witwatersrand.
This is a shortened version of a post that was originally published on the author’s blog on 10 December 2016.