  Cosmic shear is a powerful probe of cosmological models and the transition
from current Stage-III surveys like the Kilo-Degree Survey (KiDS) to the
increased area and redshift range of Stage IV-surveys such as \Euclid will
significantly increase the precision of weak lensing analyses. However, with
increasing precision, the accuracy of model assumptions needs to be evaluated.
In this study, we quantify the impact of the correlated clustering of weak
lensing source galaxies with the surrounding large-scale structure, the
so-called source-lens clustering (SLC), which is commonly neglected. We include
the impact of realistic scatter in photometric redshift estimates, which
impacts the assignment of galaxies to tomographic bins and increases the SLC.
For this, we use simulated cosmological datasets with realistically distributed
galaxies and measure shear correlation functions for both clustered and
uniformly distributed source galaxies. Cosmological analyses are performed for
both scenarios to quantify the impact of SLC on parameter inference for a
KiDS-like and a \Euclid-like setting. We find for Stage III surveys like KiDS,
SLC has a minor impact when accounting for nuisance parameters for intrinsic
alignments and shifts of tomographic bins, as these nuisance parameters absorb
the effect of SLC, thus changing their original meaning. For KiDS (\Euclid),
the inferred intrinsic alignment amplitude $A_\mathrm{IA}$ changes from
$0.11_{-0.46}^{+0.44}$ ($-0.009_{-0.080}^{+0.079}$) for data without SLC to
$0.28_{-0.44}^{+0.42}$ ($0.022_{-0.082}^{+0.081}$) with SLC. However, fixed
nuisance parameters lead to shifts in $S_8$ and $\Omega_\mathrm{m}$. For
\Euclid we find that $S_8$ and $\Omega_\mathrm{m}$ are shifted by 0.14 and 0.12
$\sigma$, respectively, when including free nuisance parameters. Consequently,
SLC on its own has only a small impact on the inferred parameters.
