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Aging, Factor Returns, and Immigration Policy

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  • Lena Calahorrano
  • Oliver Lorz

Abstract

In this note we analyze how aging affects immigration policy. We set up a dynamic political-economy model of representative democracy in which the government of the destination country sets the immigration level to maximize aggregate welfare of the constituency. Aging, i.e. a decline in the growth rate of the native population, has an expansionary effect on immigration. This immigration effect may even overcompensate the initial decline in population growth such that the total labor force grows more strongly and the capital stock per worker declines. We also compare our results to the social planner allocation and to the median-voter equilibrium.
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Suggested Citation

  • Lena Calahorrano & Oliver Lorz, 2011. "Aging, Factor Returns, and Immigration Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(5), pages 589-606, November.
  • Handle: RePEc:bla:scotjp:v:58:y:2011:i:5:p:589-606
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    Cited by:

    1. Lena Calahorrano & Philipp an de Meulen, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 0299, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    2. Zaiceva, A. & Zimmermann, K.F., 2016. "Migration and the Demographic Shift," Handbook of the Economics of Population Aging, Elsevier.
    3. Lopez-Velasco, Armando R., 2016. "Solving dynamic inefficiency with politically sustainable guest worker programs," Economics Letters, Elsevier, vol. 148(C), pages 1-4.
    4. Calahorrano Lena & an de Meulen Philipp, 2015. "The Interdependence of Immigration Restrictions and Expropriation Risk," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 2047-2077.
    5. Calahorrano, Lena & an de Meulen, Philipp, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 299, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. repec:zbw:rwirep:0299 is not listed on IDEAS

    More about this item

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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