A Dynamic General Equilibrium Analysis of Japanese & Korean Immigration
AbstractThis paper constructs a multi-sector dynamic general equilibrium model for a trading economy. We incorporate three major factors of production: capital, skilled labor & unskilled labor. We solve and calibrate the model using data from Japan and Korea. We then consider changes to immigration policy in both countries. We are able to examine the effects on output, consumption, wages, and utility. We do this for both the new steady state and for the time-path leading to that steady state. In addition, we are able, if we so wish, to impose a series of unrelated macroeconomic shock to the model. This has the advantage of allowing us to calculate confidence bands around our policy impulse response functions. We find that allowing skilled labor to immigrate leads to greater welfare gains in the steady state. We also show that there is a great deal of uncertainty surrounding the exact time path to a new steady state in the presence of the typical fluctuations associated with business cycles. We find a great deal of inertia in the transition to a new steady state.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 23501.
Date of creation: Apr 2010
Date of revision:
labor migration; factor mobility; dynamic general equilibrium; Japan; Korea; DSGE;
Find related papers by JEL classification:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- F15 - International Economics - - Trade - - - Economic Integration
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-03 (All new papers)
- NEP-DGE-2010-07-03 (Dynamic General Equilibrium)
- NEP-MIG-2010-07-03 (Economics of Human Migration)
- NEP-OPM-2010-07-03 (Open Economy Macroeconomic)
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.:
- Christiano, Lawrence J, 2002.
"Solving Dynamic Equilibrium Models by a Method of Undetermined Coefficients,"
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- Lawrence J. Christiano, 1998. "Solving dynamic equilibrium models by a method of undetermined coefficients," Working Paper 9804, Federal Reserve Bank of Cleveland.
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- Goto, Junichi, 1998. "The impact of migrant workers on the Japanese economy: Trickle vs. flood," Japan and the World Economy, Elsevier, vol. 10(1), pages 63-83, January.
- Scott M. Fuess, 2003. "Immigration Policy and Highly Skilled Workers: The Case of Japan," Contemporary Economic Policy, Western Economic Association International, vol. 21(2), pages 243-257, 04.
- Yong-Yil Choi, 2004. "The macroeconomic impact of foreign labour influx into the industrialized nation state and the complementary policies," Applied Economics, Taylor and Francis Journals, vol. 36(10), pages 1057-1063.
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