IDEAS home Printed from https://ideas.repec.org/a/kap/compec/v60y2022i2d10.1007_s10614-021-10152-3.html
   My bibliography  Save this article

Sectoral Impacts of International Labour Migration and Population Ageing in the Czech Republic

Author

Listed:
  • Martin Stepanek

    (Charles University
    Occupational Safety Research Institute
    Vitality)

Abstract

This study assesses macroeconomic and sectoral impacts of demographic changes in the Czech Republic as a result of population ageing and international migration. To do so, it develops a unique dynamic Overlapping Generations Computable General Equilibrium (OLG–CGE) model with detailed representation of individuals of different ages, educational attainment and occupations, as well as interrelations among industrial sectors in producing intermediate and final outputs. The numerical simulations show that the Czech economy will face a substantial reduction in its effective labour supply and changes in aggregate as well as sectoral demand patterns, leading to lower economic growth (4.4% lower GDP by 2050 in absence of technological progress), increase in unit labour costs (5.2% higher wages in absence of inflation) and lower competitiveness of the economy as a whole. Replacement migration may alleviate the pressure, yet the current gross immigration would need to increase by at least 8-17 thousand individuals per year compared to the UN projections (a 15–34% increase) without changing emigration patterns in order to offset the adverse long-term effects.

Suggested Citation

  • Martin Stepanek, 2022. "Sectoral Impacts of International Labour Migration and Population Ageing in the Czech Republic," Computational Economics, Springer;Society for Computational Economics, vol. 60(2), pages 375-400, August.
    • Handle: RePEc:kap:compec:v:60:y:2022:i:2:d:10.1007_s10614-021-10152-3
    DOI: 10.1007/s10614-021-10152-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10614-021-10152-3
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10614-021-10152-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Angel Aguiar & Badri Narayanan & Robert McDougall, 2016. "An Overview of the GTAP 9 Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 181-208, June.
    2. David E. Bloom & David Canning & Günther Fink, 2010. "Implications of population ageing for economic growth," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(4), pages 583-612, Winter.
    3. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    4. Michele Catalano & Emilia Pezzolla, 2016. "The effects of education and aging in an OLG model: long-run growth in France, Germany and Italy," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(4), pages 757-800, November.
    5. Zodrow, George R. & Diamond, John W., 2013. "Dynamic Overlapping Generations Computable General Equilibrium Models and the Analysis of Tax Policy: The Diamond–Zodrow Model," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 743-813, Elsevier.
    6. Ian Preston, 2014. "The Effect of Immigration on Public Finances," Economic Journal, Royal Economic Society, vol. 124(580), pages 569-592, November.
    7. Burfisher,Mary E., 2017. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9781107584686, June.
    8. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467-467.
    9. Havranek, Tomas & Horvath, Roman & Irsova, Zuzana & Rusnak, Marek, 2015. "Cross-country heterogeneity in intertemporal substitution," Journal of International Economics, Elsevier, vol. 96(1), pages 100-118.
    10. Dorte Sindbjerg Martinsen & Gabriel Pons Rotger, 2017. "The fiscal impact of EU immigration on the tax-financed welfare state: Testing the ‘welfare burden’ thesis," European Union Politics, , vol. 18(4), pages 620-639, December.
    11. Shinichi Nishiyama & Kent Smetters, 2007. "Does Social Security Privatization Produce Efficiency Gains?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1677-1719.
    12. Garau, Giorgio & Lecca, Patrizio & Mandras, Giovanni, 2013. "The impact of population ageing on energy use: Evidence from Italy," Economic Modelling, Elsevier, vol. 35(C), pages 970-980.
    13. Ray Barrell & John Fitzgerald & Rebecca Riley, 2010. "EU Enlargement and Migration: Assessing the Macroeconomic Impacts," Journal of Common Market Studies, Wiley Blackwell, vol. 48(2), pages 373-395, March.
    14. Bosetti, Valentina & Cattaneo, Cristina & Verdolini, Elena, 2015. "Migration of skilled workers and innovation: A European Perspective," Journal of International Economics, Elsevier, vol. 96(2), pages 311-322.
    15. Roberta Capello & Camilla Lenzi, 2019. "Structural dynamics of regional innovation patterns in Europe: the role of inventors’ mobility," Regional Studies, Taylor & Francis Journals, vol. 53(1), pages 30-42, January.
    16. Toman Barsbai & Hillel Rapoport & Andreas Steinmayr & Christoph Trebesch, 2017. "The Effect of Labor Migration on the Diffusion of Democracy: Evidence from a Former Soviet Republic," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 36-69, July.
    17. Burfisher,Mary E., 2017. "Introduction to Computable General Equilibrium Models," Cambridge Books, Cambridge University Press, number 9781107132207, June.
    18. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    19. Olga Kiuila, 2015. "Interactions between trade and environmental policies in the Czech Republic," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(7), pages 1014-1035, October.
    20. Kim, Euijune & Hewings, Geoffrey J.D. & Lee, Changkeun, 2016. "Impact of educational investments on economic losses from population ageing using an interregional CGE-population model," Economic Modelling, Elsevier, vol. 54(C), pages 126-138.
    21. Vladimir Klyuev & Stephen Snudden, 2011. "Effects of Fiscal Consolidation in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(4), pages 306-326, August.
    22. Burkhard Heer & Alfred Maußner, 2024. "Dynamic General Equilibrium Modeling," Springer Texts in Business and Economics, Springer, edition 3, number 978-3-031-51681-8, August.
    23. Erwin Corong & Thomas Hertel & Robert McDougall & Marinos Tsigas & Dominique van der Mensbrugghe, 2017. "The Standard GTAP Model, version 7," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 1-119, June.
    24. Claudia Geue & Andrew Briggs & James Lewsey & Paula Lorgelly, 2014. "Population ageing and healthcare expenditure projections: new evidence from a time to death approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(8), pages 885-896, November.
    25. Peter B. Dixon & Dale Jorgenson (ed.), 2012. "Handbook of Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, Elsevier, edition 1, volume 1, number 1.
    26. Taryn Dinkelman & Martine Mariotti, 2016. "The Long-Run Effects of Labor Migration on Human Capital Formation in Communities of Origin," American Economic Journal: Applied Economics, American Economic Association, vol. 8(4), pages 1-35, October.
    27. Jamie Culling & Hayden Skilling, 2018. "How does New Zealand stack up? A comparison of labour supply across the OECD," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 81, pages 1-19, April.
    28. Ray Barrell & John Fitzgerald & Rebecca Riley, 2010. "EU Enlargement and Migration: Assessing the Macroeconomic Impacts," Journal of Common Market Studies, Wiley Blackwell, vol. 48(2), pages 373-395, March.
    29. Michel Beine & Fréderic Docquier & Hillel Rapoport, 2008. "Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers," Economic Journal, Royal Economic Society, vol. 118(528), pages 631-652, April.
    30. Ratha, Dilip & Mohapatra, Sanket & Scheja, Elina, 2011. "Impact of migration on economic and social development : a review of evidence and emerging issues," Policy Research Working Paper Series 5558, The World Bank.
    31. Toshihiro Ihori, 1996. "Public Finance in an Overlapping Generations Economy," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-38990-8.
    32. Lecca, Patrizio & McGregor, Peter G. & Swales, J. Kim, 2013. "Forward-looking and myopic regional Computable General Equilibrium models: How significant is the distinction?," Economic Modelling, Elsevier, vol. 31(C), pages 160-176.
    33. Toman Barsbai & Hillel Rapoport & Andreas Steinmayr & Christoph Trebesch, 2017. "The Effect of Labor Migration on the Diffusion of Democracy: Evidence from a Former Soviet Republic," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 36-69, July.
    34. Martin Štepánek, 2019. "Pension Reforms and Adverse Demographics: Options for the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 69(2), pages 149-210, April.
    35. Lisenkova, Katerina & Mérette, Marcel & Wright, Robert, 2013. "Population ageing and the labour market: Modelling size and age-specific effects," Economic Modelling, Elsevier, vol. 35(C), pages 981-989.
    36. David Miles & Ales Cerny, 2006. "Risk, Return and Portfolio Allocation under Alternative Pension Systems with Incomplete and Imperfect Financial Markets," Economic Journal, Royal Economic Society, vol. 116(511), pages 529-557, April.
    37. Hans Fehr, 2009. "Computable Stochastic Equilibrium Models and Their Use in Pension- and Ageing Research," De Economist, Springer, vol. 157(4), pages 359-416, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Stepanek, 2017. "Pension Reforms and Adverse Demographics: The Case of the Czech Republic," Working Papers IES 2017/15, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2017.
    2. Laurent Bossavie & Çağlar Özden, 2023. "Impacts of Temporary Migration on Development in Origin Countries," The World Bank Research Observer, World Bank, vol. 38(2), pages 249-294.
    3. Bonin, Holger & Krause-Pilatus, Annabelle & Rinne, Ulf & Brücker, Herbert, 2020. "Wirtschaftliche Effekte der EU-Arbeitskräftemobilität in den Ziel- und Herkunftsländern," IZA Research Reports 102, Institute of Labor Economics (IZA).
    4. Batista, Catia & Seither, Julia & Vicente, Pedro C., 2019. "Do migrant social networks shape political attitudes and behavior at home?," World Development, Elsevier, vol. 117(C), pages 328-343.
    5. Issifou, Ismael, 2017. "Can migration reduce civil conflicts as an antidote to rent-seeking?," Economic Systems, Elsevier, vol. 41(3), pages 333-353.
    6. Taran Faehn & Gabriel Bachner & Robert Beach & Jean Chateau & Shinichiro Fujimori & Madanmohan Ghosh & Meriem Hamdi-Cherif & Elisa Lanzi & Sergey Paltsev & Toon Vandyck & Bruno Cunha & Rafael Garaffa , 2020. "Capturing Key Energy and Emission Trends in CGE models: Assessment of Status and Remaining Challenges," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 5(1), pages 196-272, June.
    7. Anca Mehedintu & Georgeta Soava & Mihaela Sterpu, 2019. "Remittances, Migration and Gross Domestic Product from Romania’s Perspective," Sustainability, MDPI, vol. 12(1), pages 1-19, December.
    8. Valsecchi, Michele & Durante, Ruben, 2021. "Internal migration networks and mortality in home communities: Evidence from Italy during the Covid-19 pandemic," European Economic Review, Elsevier, vol. 140(C).
    9. Catia Batista & Julia Seither & Pedro C. Vicente, 2017. "Migration, political institutions, and social networks," NOVAFRICA Working Paper Series wp1701, Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA.
    10. Biavaschi, Costanza & Burzynski, Michal & Elsner, Benjamin & Machado, Joël, 2016. "The Gain from the Drain: Skill-biased Migration and Global Welfare," IZA Discussion Papers 10275, Institute of Labor Economics (IZA).
    11. Georges Casamatta & L. Batté, 2016. "The Political Economy of Population Aging," Post-Print hal-02520521, HAL.
    12. Casamatta, G. & Batté, L., 2016. "The Political Economy of Population Aging," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 381-444, Elsevier.
    13. Nijkamp, P. & Poot, H.J., 2012. "Migration impact assessment: A state of the art," Serie Research Memoranda 0009, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    14. Slivko, Olga, 2018. ""Brain gain" on Wikipedia: Immigrants return knowledge home," ZEW Discussion Papers 18-008, ZEW - Leibniz Centre for European Economic Research.
    15. Riccardo Turati, 2021. "Do you want to migrate to the United States? Migration intentions and Cultural Traits in Latin America," Working Papers wpdea2101, Department of Applied Economics at Universitat Autonoma of Barcelona.
    16. Yuan-Ho Hsu & Hiroshi Yoshida & Fengming Chen, 2022. "The Impacts of Population Aging on China’s Economy," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 14(1), pages 105-130, January.
    17. Hillel Rapoport, 2018. "Diaspora externalities: A view from the South," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    18. Fehr, Hans, 2016. "CGE modeling social security reforms," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 475-494.
    19. Giesing, Yvonne & Schikora, Felicitas, 2023. "Emigrants’ missing votes," European Journal of Political Economy, Elsevier, vol. 78(C).
    20. Attanasio, O. & Bonfatti, A. & Kitao, S. & Weber, G., 2016. "Global Demographic Trends," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 179-235, Elsevier.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:compec:v:60:y:2022:i:2:d:10.1007_s10614-021-10152-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.