Executive Summary

This paper investigates the interrelationships among health expenditures, migration, and CO₂ emissions within the European Union (EU-27) through a bidirectional Granger-causal analysis. Utilizing national-level data from 2000 to 2020, the study reveals significant panel-level bidirectional causality among the three variables, while also highlighting substantial heterogeneity at the country level. The findings indicate that the interplay between these factors is influenced by structural characteristics such as energy mix, health system design, and migration exposure. The paper concludes with tailored policy recommendations aimed at addressing the unique challenges faced by different member states, thereby enhancing the EU’s capacity to balance health system sustainability, migration management, and climate commitments.

Context & Background

The European Union is currently grappling with three interrelated challenges: increasing migration flows, the imperative to reduce greenhouse gas emissions, and the strain on diverse health systems. Each of these issues has generated extensive research and policy responses; however, they are often examined in isolation. Migration not only alters the demographic landscape that health systems must accommodate but also influences consumption patterns that drive emissions. Conversely, environmental degradation and the conditions of health systems can affect migration patterns. This complex interplay necessitates a comprehensive understanding of how these factors influence one another, particularly in the context of the EU’s unique policy framework, which includes open internal borders and legally binding climate targets, such as achieving climate neutrality by 2050 and reducing greenhouse gas emissions by at least 55% by 2030.

Despite the significance of these interconnections, existing literature has largely focused on isolated relationships or non-EU contexts, such as the United States and China. This study aims to fill the gap by employing a robust econometric framework that accounts for the heterogeneous dynamics across EU member states. By analyzing data from 27 EU countries over a 20-year period, the research seeks to uncover bidirectional Granger-causal relationships among CO₂ emissions, health expenditures, and migration, thereby providing insights that can inform coordinated policy responses across these interconnected domains.

Deep Analysis

The analysis employs the Emirmahmutoğlu and Köse heterogeneous panel Granger causality test to assess the relationships among CO₂ emissions per capita, current health expenditure per capita, and net migration. The results indicate a significant rejection of the null hypothesis of no Granger causality at the panel level for all three variable pairs, suggesting that these factors are interlinked in a bidirectional manner across the EU-27. However, the country-level analysis reveals a marked heterogeneity in these relationships, with only seven member states exhibiting bidirectional causality for at least one variable pair. In contrast, 17 countries show unidirectional linkages, while three countries demonstrate no significant relationships. This heterogeneity underscores the importance of considering national contexts when formulating policy responses.

The robustness check using the Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model further elucidates the long-run associations among the variables. The analysis confirms a significant negative long-run relationship between health expenditure and CO₂ emissions, indicating that increased health spending may correlate with lower emissions, potentially through improved health outcomes and reduced pollution-related health costs. Conversely, a significant positive long-run association between net migration and CO₂ emissions suggests that rising migration flows may contribute to increased emissions, complicating the EU’s climate objectives. These findings highlight the dual challenge faced by member states: managing the healthcare needs of growing populations while simultaneously adhering to stringent emissions reduction targets.

The structural interpretation of the observed heterogeneity reveals four broad regime types among EU member states: integrated nexus countries with feedback dynamics, environment-sensitive migration regimes, demographic-pressure-driven systems, and structurally decoupled systems. Each regime type reflects distinct structural features, such as energy mix, health system organization, and migration exposure, which shape the nature of the interrelationships among the three variables. This nuanced understanding of the country-specific dynamics is critical for developing targeted policy interventions that address the unique challenges faced by each member state, rather than applying a one-size-fits-all approach across the EU.

Recommendations

• Develop targeted interventions for integrated nexus countries that strengthen migrant-inclusive healthcare while decarbonizing infrastructure.
• Implement place-based investments in environment-sensitive regimes to couple pollution remediation with healthcare improvements.
• Enhance healthcare systems in demographic-pressure-driven countries to accommodate rising migration flows while ensuring sustainability.
• Pair pollution control measures with healthcare sector decarbonization in feedback systems to align health expenditures with climate goals.

Conclusion

In conclusion, this study provides a comprehensive analysis of the bidirectional relationships among health expenditures, migration, and CO₂ emissions within the EU-27. The findings reveal significant panel-level causality while highlighting the heterogeneity of country-specific dynamics. As the EU navigates the complexities of migration, health system sustainability, and climate commitments, tailored policy responses that account for the unique structural characteristics of each member state will be essential for achieving effective governance and ensuring the long-term viability of both health systems and environmental targets.