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

  • Shimasawa, Manabu
  • Oguro, Kazumasa

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.

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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 24 (2010)
Issue (Month): 4 (December)
Pages: 586-602

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Handle: RePEc:eee:jjieco:v:24:y:2010:i:4:p:586-602
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622903

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  1. Robert Dekle, 2004. "Financing Consumption in an Aging Japan: The Role of Foreign Capital Inflows in Immigration," NBER Working Papers 10781, National Bureau of Economic Research, Inc.
  2. Börsch-Supan, Axel & Ludwig, Alexander & Winter, Joachim, 2001. "Aging, pension reform, and capital flows: A multi-country simulation model," Sonderforschungsbereich 504 Publications 01-08, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  3. Kato, Ryuta, 1998. "Transition to an Aging Japan: Public Pension, Savings, and Capital Taxation," Journal of the Japanese and International Economies, Elsevier, vol. 12(3), pages 204-231, September.
  4. Toshihiro Ihori & Ryuta Ray Kato & Masumi Kawade & Shun-ichiro Bessho, 2005. "Public Debt and Economic Growth in an Aging Japan," CIRJE F-Series CIRJE-F-372, CIRJE, Faculty of Economics, University of Tokyo.
  5. Kjetil Storesletten, . "Sustaining Fiscal Policy Through Immigration," Homapage Papers _005, Stockholm University, Institute for International Economic Studies.
  6. Edward Whitehouse, 2007. "Pensions Panorama : Retirement-Income Systems in 53 Countries," World Bank Publications, The World Bank, number 7177.
  7. Kato, Ryuta Ray, 2002. "Government Deficit, Public Investment, and Public Capital in the Transition to an Aging Japan," Journal of the Japanese and International Economies, Elsevier, vol. 16(4), pages 462-491, December.
  8. Okamoto, Akira, 2005. "Simulating progressive expenditure taxation in an aging Japan," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 309-325, April.
  9. Hans Fehr & Sabine Jokisch & Laurence Kotlikoff, 2004. "The Role of Immigration in Dealing with the Developed World's Demographic Transition," NBER Working Papers 10512, National Bureau of Economic Research, Inc.
  10. Sadahiro, Akira & Shimasawa, Manabu, 2003. "The computable overlapping generations model with an endogenous growth mechanism," Economic Modelling, Elsevier, vol. 20(1), pages 1-24, January.
  11. 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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