Anna Romiszewska INFLUENCE OF IMMIGRATION ON DYNAMICS OF ECONOMIC GROWTH AND ON CONDITION AND STANDING OF PUBLIC FINANCE OF SPAIN

At the turn of 20th and 21st century, Spain was one of target countries of earning immigration not only in the European Union, but in the entire world as well. is paper aims at analyzing the in!uence of immigration on the dynamics of Spanish GDP in the context of its direct in!uence on the level of productivity, employment rate, as well as the demographic factor that results from the share of working foreigners in the creation of national income, and the indirect impact resulting from its in!uence on, among other things, functioning of the labor market through mobility or occupational activity, as well as on changes in the volume of demand notied in the economy. Next, we are going to present the in!uence of immigration on condition and standing of public nance against the background of revenues generated by foreigners and public expenditures borne on immigrated population. Due to the size of this paper and di"cult availability of data, the analysis will cover the country as a whole, disregarding regional di#erences. Keywords: Spain, immigration, GDP, labor market, productivity, employment, public nance 68 Por. J. V. Otero, R. Casado, P. Tobes, Impacto de la inmigración..., op.cit.; F. Moreno Fuentes, M. Bruquetas Callejo, Inmigración y Estado de bienestar..., op.cit., pp. 152–153. 69 For more details on the impact of immigration on the process of ageing of Spanish society, see: A. Romiszewska, Imigracja a proces starzenia się społeczeństwa Hiszpanii (Immigration vis the process of ageing of the Spanish society), (in:) Zmieniający się świat. Perspektywa demogra&czna, społeczna i gospodarcza, J. Osiński, M. Pachocka (ed.), Ocyna Wydawnicza SGH, Warszawa 2013. Influence of immigration on dynamics of economic growth and on condition... 251 L’inuence de l'immigration sur la dynamique de la croissance économique et la situation des nances publiques en Espagne Au tournant du 20e et 21e siècle, l'Espagne a été l'un des pays cibles de l'immigration croissante, non seulement dans l'Union européenne, mais aussi dans le monde entier. Ce document vise à analyser l'inuence de l'immigration sur la dynamique du PIB espagnol dans le contexte de son inuence directe sur la productivité et le taux d'emploi, ainsi que le facteur démographique résultant de la part des étrangers travaillant dans la création du revenu national, et l'impact indirect résultant de son inuence sur le fonctionnement du marché du travail grâce à la mobilité ou l'activité professionnelle, ainsi que sur les changements dans la demande dans l'économie. Ensuite, nous présentons l'inuence de l'immigration sur l'état des nances publiques dans le contexte des revenus générés par les étrangers et les dépenses publiques pour la population immigrée. En raison de la portée de ce document et de la disponibilité limitée des données, l'analyse porte sur le pays dans son ensemble, sans tenir compte des diérences régionales. Mots-clés: l'Espagne, l'immigration, le PIB, le marché du travail, la productivité, l'emploi, les nances publiques Влияние иммиграции на динамику экономического роста и состояние государственных финансов Испании На рубеже XX–XXI веков Испания стала одной из главных принимающих стран для иммиграции не только в Европейском союзе, но и в мире. Целью статьи является исследование воздействия иммиграции на динамику ВВП Испании. Анализ проводится в контексте ее прямого влияния на уровень производительности, занятости и демографический фактор, что указывает на вклад работающих иностранцев в ВВП, и ее косвенного влияния через рынок труда, в результате воздействия на уровень мобильности и экономическую активность населения, и изменения спроса. Представлено влияние иммиграции на состояние государственных финансов, учитывая связанные с ее присутствием доходы и расходы. Из-за ограниченного объема статьи и трудностей с доступом к данным анализ не охватывает различий на региональном уровне. Ключевые слова: Испания, иммиграция, ВВП, рынок труда, производительность труда, занятость населения, государственные финансы


Introduction
At the turn of the 20th and 21st century, Spain was one of the key target countries of immigration, not only in the European Union, but in the entire world as well.In the years of the highest in ow of immigrants (1997-2007), number of foreigners increased from about 600 thousand to over 4.5 million, i.e., it went to 10% of the Spanish population.Economic crisis resulted in the slow-down of immigration; nonetheless, foreigners are still an important part of the society -11% (5 million) in 2014 1 .Immigration into Spain was mainly the immigration for work; that is why foreigners in this country are very active occupationally (almost 80%).It nds its re ection in the labor market and exerts its impact on the volume and structure of national income, and on condition of public nance in Spain.Flow of earning immigration exerted signi cant impact on the volume and structure of national income of Spain.On the basis of data on the share of immigrants in the entire working population and the level of their wages as compared to that of the native population in terms of the ratio of their productivity, one may estimate approximate contribution of foreigners to GDP generated every year.In 2000, foreigners generated about 2.7% of GDP, but in 2011, their share accounted for over 9% of Spanish GDP.In the years of the highest ow of immigrants and rapid economic development (2000-2007), their share in GDP increased over 3.5 times, i.e., up to 10.3%.A er 2008, the beginning of economic crisis brought about check in ow and then the out ow of foreigners, consequently their contribution decreased, but it is still relatively important.As for the key sectors of economy, in 2010, foreigners 1 e highest number of foreigners was recorded in the years 2010-2012, i.e. over 5.7 million people that accounted to about 12% of the society.Padrón Continuo, INE http://www.ine.es/jaxi/tabla.do?path=/ t20/e245/p04/provi/l0/& le=00000009.px&type=pcaxis&L=0[access on 1.05.2014].
had the highest share in construction (16.4%), followed by over 9% in services, and over 7% in industry 2 .
In the literature of the subject, various methodologies of estimation of in uence of ow of immigration on economic growth and condition of public nance of the host country are applied.However, the respective research involves not only methodological problems, but also di culties in obtaining indispensable statistical data 3 .e aim of this paper consists in analysis of impact of immigration on the dynamics of Spanish GDP in the context of, rst, direct in uence on the level of productivity, employment rate, and demographic factor that results from the share of working foreigners in the creation of national income, and, second, indirect impact resulting from in uence on, among other things, functioning of the labor market through mobility or occupational activity, as well as on changes in the volume of demand noti ed in economy.Next, we are going to present the in uence of immigration on the condition and standing of public nance against the background of revenues generated by foreigners and public expenditures borne on immigrated population.Due to the size of this paper and limited availability of data, the analysis will cover the country as a whole, disregarding regional di erences.

Direct impact of immigration on GDP dynamics
In the literature of the subject 4 , analysis of direct e ects of ow of immigrants upon economic growth is based on consideration of in uence of immigration on 2 See: A. Romiszewska, Wpływ imigracji na wielkość dochodu narodowego Hiszpanii (In uence of immigration on the volume of national income in Spain), (in:) J. Osiński, J. Radziszewska, Oblicza społeczeństwa obywatelskiego.Państwo.Gospodarka.Świat, Warszawa 2014.
3 ey concern, among other things, the way of estimation of productivity of immigrants' labor and the issue if and to what extent the level of their wages is its adequate re ection.It is quite di cult to get data concerning the volume of incomes and public expenditures relating to immigration.Seguridad Social, Spanish system of social insurance does not reveal this type of information.As late as in 2008, statistical yearbooks issued by this institution started containing selected information on foreigners such as number of those noti ed to insurance or those on the dole.
GDP dynamics by means of exerting e ect upon 2 factors, namely: number of population and per capita GDP. e analysis applied the following equation: GDP = population x GDP per capita As it may be seen from calculations contained in Table 1 presenting changes in GDP, GDP per capita, and in population, foreigners increased the number of the entire population and consequently had signi cant impact on the rate of economic growth in the years 1996-2012.In the period under analysis, annual growth of the native population remained almost unchanged (0.3-0.4%), but the scale of growth of population and its impact on GDP dynamics were mostly determined by changes in the number of immigrants.In the years of rapid economic development of Spain  (1996-2007), almost 24% (0,9/3,8) of increase in GDP could be attributed to the increased share of foreigners in the Spanish population, and in the period of high ow of immigrants (2000-2007) it accounted to over 35% (1.2/3.4).Economic crisis brought immigration to stand.en, even a little lower share of immigrants in the population mitigated the e ects of decrease in per capita GDP.It was the most visible in the rst years of the crisis (2008-2010), when thanks to immigrants the average annual decrease in the real GDP was by 0.5 percentage points lower, instead of 2.5-2%.In the longer term, account taken of both the years of rapid economic development and the years of crisis as well, increased share of foreigners in the population had substantial impact on GDP dynamics.Over 56% (0.9/1.6) of GDP growth in the years 2000-2012 and almost 35% (0.8/2.3) in the years 1996-2012 may be attributed to the share of foreigners in the growth of population in Spain.ough in the case of Spain, level of occupational activity of immigrants is also higher than that of the native inhabitants, one should mention, as well, that the above adopted assumption does not fully re ect the real situation.In the period under analysis, signi cant growth of occupational activity of Spanish women took place.E.g., in the years 1996-2007, immigrants were responsible for over 70% of the average annual growth of population, but the activation of Spanish women resulted in the fact that immigrants were responsible for only about 50% of growth of occupationally active population.See: data of INE -Padrón Continuo and EPA.Notwithstanding these inaccuracies, simulation made according to Bloom and Williamson methodology is quite useful as it makes it possible for us to approximately calculate the GDP per capita in the given period assuming that there is no in ow of immigrants to the country; it also signi cantly contributes to the analysis performed in this paper.Another element of immigration in uence on GDP dynamics consists in changes in per capita GDP.Performance of simulation according to Bloom and Williamson methodology9 makes it possible for us to carry out approximate evaluation of e ects of immigration as to the shape of per capita GDP in a given period of time account taken of foreigners' in uence on growth of occupationally active population and on population of the state as a whole.e analysis (Table 2) shows that without the ow of immigrants, hypothetical real per capita GDP of Spain in the years 1996-2012 would have decreased by 1.6% on the average, while in reality it was growing by about 1.2%.
e strongest in uence of immigration on the dynamics of per capita GDP could be observed in the years when Spain experienced high in ow of foreigners and rapid economic growth, at the same time.anks to immigration, average annual changes in per capita GDP were higher by about 4 percentage points and attained positive values.In the years of crisis (2008-2012), the per capita GDP without immigration would have been by over 1.5 percentage points higher (-0.58%) on the average than it was in reality (-2.2%).However, if we perform calculations according to the assumptions of the simulation, it will turn out that in the years 2008-2010, the hypothetical per capita GDP without immigration would have been higher by over 2 percentage points than that attained in reality (-1.13% instead of -3.3%).
In order to perform more detailed analysis of in uence of immigration on dynamics of per capita GDP it is necessary to analyze in uence of immigration on its three components, namely: productivity of labor, employment rate, and demographical factor.It is presented by the equation below: In uence of immigration on productivity is a matter of dispute in the scienti c circles.On one hand, quite o en immigrants, due to limited occupational experience, language barriers, and relatively recent start in the labor market of the host country, are concentrated in sectors of low level of productivity and innovation, and they perform unskilled work in spite of their higher than required professional quali cations.It brings about the decline of general productivity of all productive resources in the economy.On the other hand, however, it is stressed that immigration favors increase of productivity of better skilled employees 10 , including immigrants who also get new skills and professional quali cations with the passage of time 11 .
According to the calculations made on the basis of data of Eurostat (Table 3 12 ), in the years 2000-2010, immigration had a negative impact on the level of productivity of labor in Spain and brought about the decline in the average annual growth by over 0.2 percentage point down to 0.5%.One should also pay attention to the fact that in the years of rapid economic growth, average annual growth of labor productivity was negative (-0.37%) due to signi cantly lower (-0.51%)index of productivity of foreigners than it was in the case of native population (0.14%).However, in the period of economic crisis (2008-2010), labor productivity substantially increased as compared to the previous period (from -0.37% per year to 1.75%) thanks to the pronounced growth of labor productivity of both foreigners and native population (from -0.51% and 0.14% per year in the years 2000-2007 to 0.69% and 1.05% annually in the years 2008-2010 respectively).e discussed phenomenon -decline (or low value of growth) of labor productivity in the years of business prosperity till 2007 and its growth in the years of crisis, both in relation to the entire economy and observed in Spain in the case of native population and foreigners, is true not only 10 is is also connected with vertical mobility on the labor market and with the theory of substitution and complementarity.Immigration may result in occupational promotion of employees-members of native population and their transfer to the more productive sectors of economy.Jobs in sectors of low productivity are taken by foreign labor force.See: results of analysis of vertical mobility of Spanish population: M. Pajares, Immigración y mercado de trabajo, Observatorio Permanente de la Inmigración, Ministerio de Trabajo e Inmigración, Informes 2009-2010; A. Romiszewska, Mobilność wertykalna imigrantów (Vertical mobility of immigrants), (in:) Nowe trendy w naukach humanistycznych i społeczno-ekonomicznych 3, tom III, M. Kuczera (ed.), Creative Science -Monogra a 2012, CREATIVETIME, Kraków 2012.
for Spain, but it was also characteristic of economies of many highly developed countries, though to di erent extent 13 .It should be attributed not only to the rapid development of construction in the years 1995-2007, but also to the related process of accumulation of capital and general decline in e ciency14 .Signi cant changes in labor productivity of foreigners in Spain may be justi ed by their high share in employment in sectors of low productivity, particularly in the rapid developing construction (till 2007).Economic crisis brought about the breakdown of this sector accompanied by the sharp decrease in employment.Due to this, index of labor productivity in this sector and in the entire Spanish economy grew immediately 15 .
ough sectors with the highest employment of immigrants in Spain show the lowest growth of productivity, one should remember that the reasons of this phenomenon are not fully clear.It may result from decline of costs of labor because of the high ow of foreign labor force and stimulate development of labor-intensive sectors, and at the same time, it may lead to decrease of labor productivity.On the other hand, one should remember that lack or negligible share of working foreigners in sectors of high productivity that are most o en connected with high technologies, may be due to the lack or low demand for work, including work rendered by immigrants, especially when their human capital is not up to the mark 16 .
In the case of immigrants, employment rate (Table 3) was much higher than that of native population.Analysis of elements in uencing per capita GDP shows that employment was also the one that had the strongest impact in the period of business prosperity 2000-2007 and economic breakdown (2008-2010) investigated separately.In the years 2000-2010, high average annual indices of growth of foreigners employment (1.04%) had strong positive e ect upon negative values observed in the case of Spanish people (-0.83%) and, thanks to it, brought about positive average growth of over 0.2% per year as well as improved the dynamics of per capita GDP in the period under analysis.Bene cial in uence of high index of foreigners' employment was the most apparent in the years of business upturn (2000-2007) when it was growing by almost 1.8% per year and, at the same time, making grow indices of the economy as a whole from 0.5% to 2.3% recorded in the case of the Spanish population.In the years of economic crisis (2008-2010), the rate of decrease of index of foreigners employment was lower (-1.4%)than that of Spanish population (-3.15%) and resulted in the decline of general rate of growth of this index by -4.18% per year.One should note, however, that the share of immigrants in the negative development of indices of dynamics of employment in the period under analysis is not crucial, account taken of its signi cant decline among the native population.
e phenomenon should be interpreted, rst of all, as the e ect of the visibly higher index of foreigners' employment and their growing share in the total population of Spain.In the years of business prosperity, di erence between the level of index of immigrants' employment and Spanish people accounted for about 15 percentage points17 .In the following years, it was gradually decreasing due to the growth of unemployment.In 2010, it decreased down to 6 percentage points 18 .At the same time, higher indices of immigrants' employment, even in the period of crisis, made this value grow in relation to the entire population of the country by about 1 percent point 19 .
Demographic factor considered in the longer term, i.e. for the years 2000-2007 and 2000-2012, had a relatively lower impact on dynamics of per capita GDP.However, in both periods under analysis, and contrary to other elements, this in uence was always negative and it was the strongest in the years of crisis.us, over the entire period, foreigners were signi cantly soothing the consequences of negative values of indices of the native population (over 1% per year), the latter being due to the process of ageing and decreasing child-bearing of Spaniards.It was the most apparent in the years of business prosperity (2000-2007) when the ow of immigrants was quite substantial.en, the high index for foreigners (1.32%) almost wiped out adverse e ects of its negative values noted for the native population (-1.36%).Likewise, in the years 2008-2010, when crisis resulted in gradual check of ow of immigrants to Spain, the demographic factor of foreigners was soothing negative values of this index for the natives.One should stress that in spite of the relatively low contribution of the demographic factor to the growth of per capita GDP in the years under analysis, the demographic factor without immigration would have had decreased the rate of economic growth of the country by -1.33% annually in the years 2000-2010 and -1.36% in the years of business upli on the average.Data of the table above (Table 4), shows that immigration exerted its positive impact on dynamics of economic development of Spain, i.e. increased of the average rates of growth of per capita GDP by about 2 percentage points in the years 2000-2010 and by 2.5 percentage points in the years of business prosperity.In the years of crisis (2008-2010), immigrants' contribution to the deepening decline of per capita GDP dynamics (-0.01%) was negligible as compared to the contribution of the native population (-3.26%).In the period under analysis, immigration was exerting positive in uence on the dynamics of economic growth due to the high ow of people in the working age (high values of demographic factor) and higher than the natives' index of employment that is characteristic of earning immigration21 .At the same time, in the years 2000-2010, and in particular over the years 2000-2007, due to the negative indices of labor productivity, immigration exerted negative impact on the rate of economic growth.Summing up (Table 5), about 3/4 of change in the Spanish GDP in the years 2000-2010 resulted from the presence of immigrants.
In the years of business prosperity, foreigners added over 3 percentage points to the growth of domestic product; at the same time, in the years of economic crisis, their contribution soothed the decline in the GDP dynamics by 0.52 percentage points.Source: Own elaboration on the basis of calculations of Tables 1 and 3. Source: Own elaboration on the basis of data of Tables 1, 3 and 4.

Indirect impact of immigration on GDP dynamics
Apart from the already discussed direct e ects of ow of immigrants, literature of the subject also points to the so-called indirect in uence of immigration on the volume and structure of national income, and on the dynamics of economic growth.It consists of, rst of all, impact on indices of occupational activity and level of unemployment of the native population, rates of structural unemployment, and labor mobility.
In uence on the level of occupational activity of the native population is one of the major issues of analysis of economic e ects of immigration upon the labor market.Changes in the index of occupational activity of the population are also an important factor in uencing the volume of national income and dynamics of economic growth.As it may be seen (Table 6), in the years 1996-2012, there was no important change in the occupational activity of masculine population 22 , but in the case of women, occupational activity signi cantly increased, in particular in the group of women over 25 23 .If in 1996, about 60% of Spanish women at the age of 25-55 were active in the labor market, in 2012 this index accounted for about 80%.Investigations show that this phenomenon may be in a large measure connected with the ow of immigrant women to the labor market.High in ow of foreign women of which almost a half undertake their rst job as domestic servants, allowed to decrease wages in this sector of economy and to have higher supply of this type of services.is favored entering the labor market by women who had been occupationally inactive so far due to nursing children or elder people.It is estimated that in the years 1996-2008, ow of immigrant women resulted in the 3 percentage point growth of index of employment of women with high professional skills who were involved in nursing children or dependent adults; in the case of women nursing little children, the index increased by 10 percentage points 24 .us, ow of immigrants exerted its impact on growth of index of occupational activity in Spain not only in a direct way, through the ow of foreigners to the labor market, but also in an indirect way, i.e. making Spanish women more active.
Another area of indirect in uence of immigration on economic growth and thus relating to the labor market is the issue of connection between mobility on the labor market, level of structural unemployment, and unemployment among native population.Occupational mobility is an important factor in the functioning of labor market through shaping its exibility and more rapid adjustment of supply of and demand for labor.Investigations of the issue show that foreigners in Spain are more vertically, horizontally, and geographically mobile than Spaniards.Flow of immigration had also positive in uence on vertical and horizontal mobility of Spanish population; it nds its re ection in transfers between professional groups (professional promotion) and sectors of economic activity where wages are higher and better skills are required 25 .Higher mobility of foreigners in the labor market, in particular 23 For more details on the extent of changes in the level of occupational activity of women in di erent periods of their life, account taken of family life as well, see: M. Sarriegui, Desigualdades entre mujeres y hombres en el mercado laboral, http://pendientedemigracion.ucm.es/info/ec/jec8/Datos/documentos/comunicaciones/Feminista/Larra%F1aga%0Mercedes.PDF 24 L. Farré, L. González, F. Ortega, Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women, " e B. E. Journal of Economic Analysis & Policy", Vol.11, Iss. 1 (Contributions), Article 34, 2011.For the sake of comparison, according to the estimates of the Spanish government, 1/3 of increase in occupational activity of Spanish women (by 12.5 percentage points) in the years 1996-2005 may be attributed to the in ow of immigration: M. Sebastian the geographical one26 , together with, rst of all, complementary role of foreign labor force on the Spanish labor market impedes growth of real wages of employees and makes the level of structural unemployment decline.According to the estimates of Spanish government, in the years 1996-2005, immigration made the rate of structural unemployment decrease by 2 percentage points27 .One should also note that no one observed any negative in uence of immigrants on the level of employment of the native population, i.e., growth of the level of unemployment in this group that could result in cutting out Spaniards from the labor market.It, rst of all, con rms the complementary role of immigrants on the labor market as well as the fact that growth of the number of employed fosters the economic growth28 .In the context of the indirect impact on economic growth, one should pay attention to analysis of in uence of immigration on the volume of Spanish GDP, performed by R. Arce Borda 30 .In his input-output model, he took into consideration elements that have been previously disregarded and are di cult to measure.First of all, he focused on estimation what would be the in uence of ow of foreign labor to economy (and its concentration in speci c sectors) on the volume of production generated by the natives in the remaining sectors.Apart from the issue of the volume of generated production, there is still another one that would give us better picture of the general in uence of immigration on economic growth.It is the question of demand not only that noti ed by immigrants, but also its overall change resulting from increased number of employed, both foreigners and Spaniards.e key conclusions that appeared due to the application by Borda of the model of Gosh and Leontief for the year 2009 were the following: • rst, total in uence of immigration on economic growth brought about growth of GDP by 13.2%, of which direct in uence on GDP accounted for 9.75% and that on the volume of production (Gosh's e ect) amounted to 8.5%, and nally in uence through the change in the volume of demand (Leontief 's e ect) accounted for 4.1%, • increase in employment (legal and illegal) of immigrants correlated with the growth of employment of the native population; employment of 3 immigrants brought about employment of 1 Spaniard, on the average, • in the years 2000-2009, thanks to the employment of foreign labor force, over 1.5 million of new jobs for the natives were created 31 .

In uence of immigration on the condition and standing of public nance in Spain
Apart from the labor market and economic growth, the in uence on the condition and standing of public nance of the state is one of main areas of analysis of economic e ects of immigration to the host country.In Spain, the issue is widely discussed in public, it is also interesting for the scienti c circles where in its analyzed mainly in the context of in uence of immigration of functioning of the welfare 30 R. Arce Borda, El Impacto Económico de la Inmigración en España, 2000-2009: Antes y Después de la Crisis, "Revista de economia", 854, 2010, pp.23-25.
state.However, there are only a few publications concerning this important issue 32 .e literature investigates, rst of all, its e ects resulting from social insurance paid by those legally employed (Spanish Seguridad Social), volume of revenues from indirect taxes and from personal income taxes (Spanish IRPF -Impuesto sobre la renta de las personas físicas).As far as expenditures are concerned, the analysis is based on social bene ts, including health protection and education.

In uence of immigration on volume and dynamics of revenues of public nance sector
Contributions paid by immigrants to Seguridad Social, the system of social insurance in Spain, is the largest source of revenues of public nance sector in terms of volume.One should remember, however, that apart from their direct share, i.e., volume of nancial resources paid in connection with legal employment in Spain, immigrants exert their impact on Seguridad Social in an indirect way, namely through in uencing the situation of the native population on the labor market.i.e., level of occupational activity, employment, and mobility that may be connected with professional promotion and higher wages, and consequently higher payments from Spanidards to Seguridad Social 33 .Unfortunately, in both cases there are di culties in estimating this in uence.In the rst case, they consist in di cult availability of detailed data collected by Seguridad Social 34 , in the second, they are due to methodological problems.Nevertheless, one may observe certain tendencies that exert their impact on the volume of revenues of Seguridad Social connected with immigration.
First, as it has been already mentioned, level of foreigners' wages in Spain is lower than that of the native population 35 that results in relatively lower revenues of the 32 Por.Fundación Ideas, La contribución…, op.cit., pp.64-68; F. Moreno Fuentes, M. Bruquetas Callejo, Inmigración y Estado de bienestar en España, Colección Estudios Sociales, no.31, La Caixa 2011; M. Sastre García, T. Pérez Barrasa, L. Ayala Cañón, La contribución de los inmigrantes al IRPF, Presupuesto y Gasto Público 61/2010, Secretaría General de Presupuestos y Gastos, Instituto de Estudios Fiscales, 2010. 33In this paper, positive in uence of immigration on the situation of native population on the labor market in Spain was stressed several times.It concerns growth of occupational activity, particularly that of women, and occupational promotion as well.Due to the fact that on the Spanis labor market, foreign labor force plays, rst of all, complementary role, there is no evident in uence of immigrants on growth of unemployment among Spanish people.See: M. Pajares, Inmigración…, 2010, op.cit.; M. Pajares, Inmigración..., 2009, op.cit.; M. Pajares, Inmigración, 2008, op.cit.;J. Cuadrado Roura, C. Iglesias Fernández, R. Llorente Heras, Inmigración y mercado de trabajo en España (1997-2005), Informes 2007, Economía y Sociedad, Fundación BBVA, 2007.However, estimation of indirect in uence of immigration on the volume of receipts from the Spanish population to Seguridad Social is di cult due to methodological problems and no access to statistical data. 34Ministerio de Empleo y Seguridad Social does not publish this type of data. 35Di erences in remunerations of foreigners and native population increased from about 20% in 2002 to 30% in 2011.
system in relation to payments obtained from Spaniards.Second, attention should be paid not only to the absolute number of foreigners noti ed to Seguridad Social, but also to the change of their share in relation to the entire immigrated population in Spain.
High ow of immigrants to Spain was accompanied by the growth of the number of foreigners noti ed to social insurance from 630 thousand in 2002 to almost 1.7 million in 2012.In terms of absolute values, the highest number was recorded in 2008, i.e., over 2 million people.Relation of the number of foreigners noti ed to Seguridad Social to the total of immigrated population was also growing till the beginning of economic crisis.It grew from 32% in 2002 to almost 44% in 2007, then it signi cantly decreased down to 32% in 2012.However, one should also mention that similar phenomenon occurred in the case of Spaniards36,37 .As it is quite di cult to obtain data on the volume of system's revenues from foreigners, one should note that in 2005, according to the estimates of Spanish government, they accounted for 7.4% 38 of all respective revenues of public nance, and at the same time, they accounted for 35% of public revenues from foreigners 39 .Relatively low percentage share of Seguridad Social revenues from foreigners as compared to their share in the case of Spanish population and total of those employed is due, rst of all, to the higher index of illegal employment and low wages.
Taking into account the country of origin of immigrants, one may clearly see that foreigners from the EU countries and from Switzerland have the lowest indices due to the fact that earning money is not the main reason of their immigration.People from Portugal and Poles are the exception 40 .As far as immigrants from the third countries are concerned, Ukrainians, people from Peru, Colombia, and Ecuador hold the highest indices 41 .
Indirect taxes, in particular VAT, are another source of revenues.In 2005, VAT revenues from foreigners accounted for 6.8% of all discussed revenues and for 16% of the total of public revenues from foreigners 42 .It is stressed in the literature of the subject that lower revenues from indirect taxes paid by foreigners, as compared to those paid by the native population, are due to, rst of all, such factors as: lower wages, unilateral transfers of money to the countries of their origin, and di erent consumption patterns (higher share of primary goods levied with lower tax rates).Similar to the previous case, one should remember that immigration due to its impact on the situation of Spaniards on the labor market may also have an indirect in uence on the level of consumption of the latter group, and consequently on revenues from indirect taxes 43 .
Personal income taxes (Spanish IRPF) are the third important source of public revenues obtained from immigrants.According to the 2005 data, IRPF paid by foreigners constituted 3.2% of tax revenues from natural persons in Spain and 8% of public revenues generated by immigrated population 44 .In this case, as well, lower wages and illegal work are indicated as the main reasons of relatively low income tax revenues paid by foreigners as compared to those obtained from the native population.

In uence of immigration o the volume and dynamics of expenditures of public sector
According to the Spanish legal regulations, people living in Spain, notwithstanding their citizenship, have equal access to social bene ts, such as unemployment bene ts, pensions, or health protection 45 .However, investigations performed by Encuesta de Condiciones de Vida on the basis of micro-data, i.e. comparative analysis of enjoying social bene ts by natives and immigrants 46 show that in the case of meeting the same conditions, foreigners' families will less probably obtain the bene ts at all and In 2000-2007, unemployment bene ts for foreigners accounted for about 10-13% of the total of public expenditures on immigrated population in Spain.At the same time, the share of bene ts paid to unemployed foreigners in their total was steadily growing from 1% to over 6% 53 .
Spanish legislation ensures equal access to free of charge public health protection to both natives and foreigners 54 .Comparative analyses show that public health protection covers foreigners in the same way as it is in the case of Spaniards.Negligible di erences consist in the fact that foreigners enjoy emergency services more frequently and they enjoy GPs and specialists services more seldom.At the same time, as young immigrants prevail in the total number of foreigners 55 , average expenditures on per capital health protection borne by the state are lower in the case of foreigners than those borne in the case of Spaniard.ey are also lower than it would result from their share (disregarding the age structure) in the Spanish population 56 .In the years 2000-2007, expenditures on health protection had the highest share (over 40%) in public expenditures on immigrants.Moreover, percentage of expenditures on immigrated population in the total amounts spent on health protection increased from 1% to 5% 57 .
Education is another quite important area.In Spain, ow of immigrants was accompanied by growth in the number of children (about 15% of the immigrated population).In the school year 2010/2011, over 10% (781 thousand) of children in school age (excluding universities) were foreigners 58 .In the years 2000-2007, expenditures on education, similar to expenditures on health care, had the highest share (about 35-40%) in public expenditures on immigrants.At the same time, the percentage of expenditures on immigrants' education in the total educational expenditures in Spain was all the time growing (from 1% to 6%) 59 .

Estimation of in uence of immigration on balance of public nance in Spain
Estimation of in uence of immigration on condition and standing of public nance involves methodological di culties and problems connected with availability of respective statistical data.As it has been already mentioned, in the literature of the subject, in uence of immigration is considered, rst of all, in the context of functioning of the welfare state.Static approach dominates in these investigations, but more and more o en one may nd analysis that approaches the issue in the dynamic and long-term way.us, there are forecasts of future in uence of immigration on condition of the state nance, in particular in such areas as pensionary system, account taken of changes both in the intensity of ow of immigrants as well as in the age structure of the immigrated population in Spain.
Analyses show, that in the years 2000-2010, revenues of public nance connected with the presence of immigrants in Spain exceeded the costs.According to the estimates of the government, the share of foreigners in the total of public expenditures amounted to 5.4%, and their share in revenues accounted for 6.6%.A half of the surplus of public nance may be attributed to revenues from immigrants.e situation may results from retirement contributions paid by foreigners (8,000 million EUR) accompanied by their very low enjoyment of pensionary bene ts (400 million EUR) 60 .In 2008, surplus of revenues over expenditures connected with foreigners was estimated at about 2 million EUR 61 .In 2010, according to the calculations of Fundación IDEAS, it amounted to about 3 million EUR 62 .
In spite of the pronounced positive e ects of immigration upon the condition of public nance, one should remember that in the case of Spain immigration is a relatively new phenomenon.us, one may expect that such features as young age and lower, in comparison with the native population, share of children and people of post-working age in this group will be gradually decreasing.It is also worthwhile mentioning that in the years 2000-2007, in spite of the persistent surplus of revenues over public expenditures as well as lower share of foreigners in expenditures as compared to their share in the population as whole, percentage of public expenditures on foreigners was still signi cantly growing, from less than 1% in 2000 to almost 4% in 2007 63 .us, one may assume that public expenditures on foreigners will be growing along with growing similarity of the structure of immigrated population to the structure of the native population 64 .
Considering the process of ageing of European societies, including that of Spain, immigration is of special importance in the context of functioning of pensionary systems.In the case of Spain, ow of foreigners improved the relation between the number of people who pay pensionary contributions and number of pensioners from 2.2 in 2000 to 2.5 in 2010 65 .In this way, till the moment when immigrants become pensioners ( rst ow about 2030), they will substantially stabilize this system.It is also noted that a er 2030, not all foreigners will enjoy pensionary bene ts in Spain, and their amount will be lower that natives' bene ts due to di erences in wages 66 .

Conclusion
On the basis of the analysis, one may state that ow of immigration was very advantageous from the point of view of dynamics of economic growth in Spain.Simulation of generation of hypothetical per capita GDP indicates that without the ow of foreigners the years 1996-2012 would have been the period of its regular decrease, and even in conditions of business prosperity it would have attained about -2.5% per year.In the period under analysis, immigration had a major positive impact on the dynamics of economic growth by means of relatively high ratio of demographic factor wiping out the e ects of negative values characteristic of the native population resulting from the process of ageing of the Spanish society.In the longer term (years 2000-2007 and 2000-2010), one may also notice positive in uence of immigration on economic growth through its impact on the index of employment that was much higher than that of the native population, especially in the years of business prosperity.As far as in uence of immigration on dynamics of economic growth is concerned, one should also mention the relatively low level of indices of labor productivity of foreigners that resulted in the decrease of the value of this coe cient in the entire economy, as well as its characteristic decline in the years of business prosperity and growth in the years of crisis.As it was stressed in this paper, the case of Spain was not isolated among other countries.Moreover, several concepts and arguments that explain this phenomenon were also presented.Negative consequences of decline in productivity were wiped out by the already mentioned high indices of employment and demographic factor.
Moreover, immigration had an indirect positive in uence on the rate of economic growth, rst of all through the stimulation of occupational activity of Spanish women, as well as on the increased elasticity of the labor market that resulted in the creation of new jobs and growth of demand.
As far as the in uence of immigration on the condition of the balance of public nance of Spain is concerned, one may state that in the period under analysis revenues were substantially higher than expenditures connected with foreigners.However, one should point out a few features characteristics of this issue.First, the share of receipts generated by foreigners in the total public revenues was lower than it could have resulted from their proportion in relation to the entire population and all employees.It may be due both to the lower level of wages of foreigners, and to the higher percentage of those employed illegally and those employed in sectors subject to di erent rules of payment of social insurance contributions 67 .Second, in spite of the fact that public expenditures on foreigners remained on a relatively low level (lower than revenues), they were nevertheless growing.us, one may come to the conclusion that the above observation is characteristic of the situation where immigration is a relatively new phenomenon (in the case of Spain, since the mid 90's of the 20th century, intensi ed a er 2000) and it is, rst of all, of an earning nature, and most immigrants are young people.One may also assume that expenditures on foreigners will be even more growing with the passage of time, though, as it was already mentioned, according to the estimates 68 , till 2025-2030, when the rst wave of immigrants will start drawing their pensions, they should not exceed 60% of expenditures on the native population.Immigration exerted positive impact on stability of the Spanish pensionary system as it signi cantly increased the relation between people who pay contributions and those who draw their bene ts.However, neither it is a "panaceum" for the system nor the solution to the problem of ageing of the Spanish population 69 , though in the short term it improves demographic situation of the state.
is paper is a result of BMN 2013 project realized at Collegium of Socio-Economics at the Warsaw School of Economics

Abstract
At the turn of 20th and 21st century, Spain was one of target countries of earning immigration not only in the European Union, but in the entire world as well.
is paper aims at analyzing the in uence of immigration on the dynamics of Spanish GDP in the context of its direct in uence on the level of productivity, employment rate, as well as the demographic factor that results from the share of working foreigners in the creation of national income, and the indirect impact resulting from its in uence on, among other things, functioning of the labor market through mobility or occupational activity, as well as on changes in the volume of demand noti ed in the economy.Next, we are going to present the in uence of immigration on condition and standing of public nance against the background of revenues generated by foreigners and public expenditures borne on immigrated population.Due to the size of this paper and di cult availability of data, the analysis will cover the country as a whole, disregarding regional di erences.Keywords: Spain, immigration, GDP, labor market, productivity, employment, public nance 68 Por.J. V. Otero, R. Casado, P. Tobes, Impacto de la inmigración…, op.cit.; F. Moreno Fuentes, M. Bruquetas Callejo, Inmigración y Estado de bienestar…, op.cit., pp.152-153. 69For more details on the impact of immigration on the process of ageing of Spanish society, see: A. Romiszewska, Imigracja a proces starzenia się społeczeństwa Hiszpanii (Immigration vis the process of ageing of the Spanish society), (in:) Zmieniający się świat.Perspektywa demogra czna, społeczna i gospodarcza, J. Osiński, M. Pachocka (ed.), O cyna Wydawnicza SGH, Warszawa 2013.
L'in uence de l'immigration sur la dynamique de la croissance économique et la situation des nances publiques en Espagne Au tournant du 20e et 21e siècle, l'Espagne a été l'un des pays cibles de l'immigration croissante, non seulement dans l'Union européenne, mais aussi dans le monde entier.Ce document vise à analyser l'in uence de l'immigration sur la dynamique du PIB espagnol dans le contexte de son in uence directe sur la productivité et le taux d'emploi, ainsi que le facteur démographique résultant de la part des étrangers travaillant dans la création du revenu national, et l'impact indirect résultant de son in uence sur le fonctionnement du marché du travail grâce à la mobilité ou l'activité professionnelle, ainsi que sur les changements dans la demande dans l'économie.Ensuite, nous présentons l'in uence de l'immigration sur l'état des nances publiques dans le contexte des revenus générés par les étrangers et les dépenses publiques pour la population immigrée.En raison de la portée de ce document et de la disponibilité limitée des données, l'analyse porte sur le pays dans son ensemble, sans tenir compte des di érences régionales.

Table 1 . Influence of immigration on the Spanish GDP dynamics through the change in the number of population (in %)
GDP -average annual growth of real GDP GDP per capita -average annual growth of real per capita GDP Population -average annual growth of Spanish population Source: Own elaboration on the basis of data of INE and Eurostat 5 .

Table 2 . Influence of immigration on economic growth in Spain in the years 1996-2012 according to Bloom and Williamson methodology 6
a -average annual growth of population (in %), b -average annual growth of occupationally active population excluding immigrants (in %).It is assumed that the share of immigrants in the total growth of population corresponds to their share in growth of occupationally active population.It is based on the assumption that percentage of foreigners in the working age is higher than in the case of the native population 7 , c -average annual growth of real per capita GDP (in 2005 prices) (in %), d -average annual growth of per capita GDP excluding immigration (in %).Bloom and Williamson coecients, X = -1.7,Y= +1.9.Source: Own elaboration on the basis of data of INE and Eurostat 8 . 6D. Bloom, J. Williamson, Demographic Transitions and Economic Miracles in Emerging Asia, "NBER 7

Table 3 . Influence of immigration on the demographic factor, employment, and labor productivity. Average annual indices of growth (in %)
Source: Own elaboration on the basis of data of Eurostat 20 .

Table 6 . Ratios of occupational activity of Spanish people by sex in the years 1996-2012 (in %)
Source: Own elaboration on the basis of data of EPA and INE 29 .deautoctonos e inmigrantes en Espana.Entre la corvengencia y segmentacion.Un analisis de Muestra Continua de Vidas Laborales 2007, Arxius de Ciencias Sociales, no. 24, 2011.