Can Immigration Save Our Social Protection System?

In the early 2000s1 , replacement immigration was advocated as an answer to the forecast population decline (in particular that of the working population). On top of this quantitative objective came, at the same time, the further ambition of qualitative control of inflows: selective immigration. One of the arguments put forward to support this change of direction in the migration policy was a bigger net contribution to public finance by skilled immigrants compared with that of unskilled immigrants2. Thus, by limiting the population ageing process, immigration could help reduce the associated tax burden, particularly if migration policy is selective. Using a computable general equilibrium model, this letter assesses the contribution of migration policy to the reduction in social protection financing needs, in the context of the population ageing process. Stopping immigration from 2010 would lead to an increase in these financing needs of 1.3% by 2050. A more proactive migration policy (a doubling of the average net annual flow) would reduce the tax burden of ageing but at the expense of considerable demographic changes. The relative gain achieved by a selective migration policy is temporary and disappears over the long term.