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Migration, social security, and economic growth

  • Chen, Hung-Ju
  • Fang, I-Hsiang

This paper studies the effect of population aging and international migration on economic performance. Fertility is endogenized so that immigrants and natives can have different fertility rates, which provides a more realistic view of policy effects. Fertility is an important determinant to the tax burden of social security since it affects the quantity and quality of future tax payers. We find that introducing immigrants into the economy can reduce the tax burden of social security. If the survival probability of young agents to old age (or the replacement ratio) is high enough, the growth rate of GDP per worker for an economy with international migration will be higher than for a closed economy. Regarding migration policies, our numerical results indicate that economic growth rate of GDP per worker will first decrease then increase as the flow of immigrants increases. Attracting more skilled immigrants will enhance economic growth.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 32 (2013)
Issue (Month): C ()
Pages: 386-399

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Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:386-399
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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