Emigration of in Germany educated and employed citizens has implications on demographic and labour market outcomes as well as fiscal effects. The following study calculates the fiscal balance of brain drain in Germany based on two typical cases.
In this study the Ifo Institute contrasts public revenue from taxes and social insurance contributions with the expenses for education, infrastructure, pensions and other social benefits. Using two typical cases, a skilled worker in the metal industry and a medical doctor, the authors calculate the fiscal effects of emigration. In particular, the fiscal costs of publicly provided education are compared to the fiscal revenue, if emigrants would have stayed in Germany.
The emigration of qualified workers places a considerable burden on the government’s budget and social security funds. If the skilled worker leaves Germany at the age of 23 years, public funds will lose EUR 281,000. This calculation discounted future payments up to 2008. For the doctor it was assumed that she emigrated during her training as a specialist at the age of 30. In this case her emigration resulted in a loss of EUR 1,075,000 (value as of 2008).
Viewed over their entire life span, emigration leads to a negative balance for public funds in Germany. Since the emigrants only paid minimal tax and social contributions before they left but profited from free training, they cost the public around EUR 160,000 for the skilled worker and EUR 436,000 for the doctor by the time they left. If they had stayed in Germany, they would have paid over their entire lifetime EUR 121,000 (skilled worker) or 639,000 EUR doctor) into the public funds.
Christian Holzner, Sonja Munz and Silke Übelmesser, “Fiskalische Wirkungen der Auswanderung ausgewählter Berufgruppen”, ifo Schnelldienst 62 (11), 2009, S. 28-33.
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