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Impact of immigration on the Japanese economy: A multi-country simulation model

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  • Shimasawa, Manabu
  • Oguro, Kazumasa

Abstract

To quantify the impacts of immigration and fiscal reconstruction on the Japanese economy, we present a dynamic computable general equilibrium OLG model with an overlapping generations structure. We use a total of 16 countries and regions, both including those that are industrialized, such as Japan, the US, and the EU, and developing countries, such as China, Brazil, the Philippines, and Peru. Our simulation results show that a permanent immigration flows of 150,000 will improve the Japanese economy and the welfare of current and future generations. On the other hand, a standalone increase in the consumption tax will not improve long-run welfare. The results indicate that substantially increased inflows of working-age immigrants would alleviate the need for future fiscal reform and also help to dramatically reduce the public pension burden on the working generations.

Suggested Citation

  • Shimasawa, Manabu & Oguro, Kazumasa, 2010. "Impact of immigration on the Japanese economy: A multi-country simulation model," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 586-602, December.
  • Handle: RePEc:eee:jjieco:v:24:y:2010:i:4:p:586-602
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    References listed on IDEAS

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    6. Dekle, Robert, 2004. "Financing consumption in an aging Japan: The role of foreign capital inflows and immigration," Journal of the Japanese and International Economies, Elsevier, vol. 18(4), pages 506-527, December.
    7. Aglietta, Michel & Chateau, Jean & Fayolle, Jacky & Juillard, Michel & Le Cacheux, Jacques & Le Garrec, Gilles & Touze, Vincent, 2007. "Pension reforms in Europe: An investigation with a computable OLG world model," Economic Modelling, Elsevier, vol. 24(3), pages 481-505, May.
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    Cited by:

    1. repec:bla:ecinqu:v:55:y:2017:i:3:p:1287-1307 is not listed on IDEAS
    2. Akira Okamoto, 2013. "Welfare Analysis of Pension Reforms in an Ageing Japan," The Japanese Economic Review, Japanese Economic Association, vol. 64(4), pages 452-483, December.
    3. Jinno, Masatoshi, 2018. "Calculating the net benefi t of admitting immigrants under the de fined-return-ratio pay-as-you-go pension system," MPRA Paper 84931, University Library of Munich, Germany.
    4. Akira Okamoto, 2013. "Simulating Public Pension Reforms in an Aging Japan: Welfare Analysis with LSRA Transfers," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 9(4), pages 597-632, September.
    5. Hisahiro Naito, 2014. "Pareto-improving Immigration and Its Effect on Capital Accumulation in the Presence of Social Security," UTokyo Price Project Working Paper Series 027, University of Tokyo, Graduate School of Economics.
    6. Hisahiro Naito, 2015. "Immigration as a Policy Tool for the Double Burden Problem of Prefunding Pay-as-you-go Social Security System," Tsukuba Economics Working Papers 2015-002, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
    7. Hisahiro Naito, "undated". "Pareto-improving Immigration and Its Effect on Capital Accumulation in the Presence of Social Security," Working Papers e81, Tokyo Center for Economic Research.
    8. Selahattin İmrohoroğlu & Sagiri Kitao & Tomoaki Yamada, 2017. "Can Guest Workers Solve Japan'S Fiscal Problems?," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1287-1307, July.
    9. Hisahiro Naito, 2014. "Pareto-improving Immigration in the Presence of Social Security," Tsukuba Economics Working Papers 2014-003, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
    10. Hisahiro Naito, 2013. "Pareto-improving Immigration and Its Effect on Capital Accumulation in the Presence of Social Security," Tsukuba Economics Working Papers 2013-004, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
    11. Sagiri Kitao & Selahattin Imrohoroglu & Tomoaki Yamada, "undated". "Can Guest Workers Solve Japan's Fiscal Problems?," Working Papers e105, Tokyo Center for Economic Research.

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