Refugee Immigration and Public–Sector Finances: Evidence from Sweden

We present an analysis of how refugee immigration affects public-sector finances during the refugees’ first years of stay in Sweden. Two different measures are presented. First, public-sector revenues are related to public-sector costs under the assumption that public costs increase in proportion to refugee immigration. Second, public-sector revenues are related to public-sector costs when, in the short run, costs for public administration, infrastructure, and national defense are assumed to be fixed as refugee immigration increases. We find that refugee immigration implies a net cost for public-sector finances for several years and that this cost to a large extent is dependent on the refugees’ labor market assimilation.