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Global Aging and Fiscal Policy with International Labor Mobility: A Political Economy Perspective

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Mehmet S. Tosun

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Abstract

This paper uses an overlapping generations model with international labor mobility and a politically responsive fiscal policy to examine aging in developed and developing regions. Migrant workers change the political structure composed of young and elderly voters in both labor-receiving and labor-sending countries. Numerical simulations show that the developed region benefits more from international labor mobility through the contribution of migrant workers as laborers, savers, and voters. The developing region experiences significant growth in all specifications but benefits more under international capital mobility. Restricting political participation of migrant workers in the developed region produces inferior growth results.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/140.

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Length: 35 pages
Date of creation: 28 Jul 2005
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Handle: RePEc:imf:imfwpa:05/140

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Keywords: Population ; Aging ; Fiscal policy ; Labor mobility ; Capital flows ; Economic models ; Political economy ;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  7. Kjetil Storesletten, . "Sustaining Fiscal Policy Through Immigration," Homapage Papers _005, Stockholm University, Institute for International Economic Studies. [Downloadable!]
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  8. Phillip Swagel & Efraim Sadka & Assaf Razin, 2002. "The Aging of the Population and the Size of the Welfare State," IMF Working Papers 02/68, International Monetary Fund. [Downloadable!]
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  12. repec:fth:harver:1490 is not listed on IDEAS
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  15. Leers, Theo & Meijdam, Lex & Verbon, Harrie A. A., 2004. "Ageing, migration and endogenous public pensions," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 131-159, January. [Downloadable!] (restricted)
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  18. Harris, Amy Rehder & Evans, William N. & Schwab, Robert M., 2001. "Education spending in an aging America," Journal of Public Economics, Elsevier, vol. 81(3), pages 449-472, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lamin Leigh, 2006. "Hong Kong Special Administrative Region: Macroeconomic Impact of an Aging Population in a Highly Open Economy," IMF Working Papers 06/87, International Monetary Fund. [Downloadable!]
  2. Mehmet Tosun, 2006. "Explaining the Variation in Tax Structures in the MENA Region," Working Papers 06-018, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics. [Downloadable!]
  3. Mehmet Serkan Tosun & Claudia Williamson & Pavel Yakovlev, 2007. "Population Aging, Elderly Migration and Education Spending: Intergenerational Conflict Revisited," Working Papers 07-003, University of Nevada, Reno, Department of Economics & University of Nevada, Reno , Department of Resource Economics. [Downloadable!]
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