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Impacts of Immigration on an Ageing Welfare State: An Applied General Equilibrium Model for France

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  • Xavier Chojnicki
  • Lionel Ragot

Abstract

Immigration is often perceived as an instrument of adaptation for aging countries. In this paper, we evaluate, using a dynamic general equilibrium model, the contribution of migration policy in reducing the tax burden associated with the aging population in France. Four variants, compared to a baseline scenario based on official projections for France (INSEE, COR, etc.), are simulated with the aim to quantify the immigration effects on the French social protection finances. The first variant assesses the economic effects of immigration in France as projected into official forecasts. The three other variants are built on the same more ambitious annual quantitative flows of immigrants (corresponding to net inflows that have characterized the second great wave of immigration in France in the twentieth century). These three variants only distinguish in terms of the skill structure of new migrants. We show that the age and skill structure of immigrants is the key feature that mainly determines the effects on social protection finances. Overall, these effects are all the more positive in the short-medium term that the migration policy is selective (in favor of more skilled workers). In the long term, beneficial effects of a selective policy may disappear. But the financial gains from more consequent migration flows are relatively moderated in comparison of demographic changes it implies.
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Suggested Citation

  • Xavier Chojnicki & Lionel Ragot, 2016. "Impacts of Immigration on an Ageing Welfare State: An Applied General Equilibrium Model for France," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 258-284, June.
  • Handle: RePEc:ifs:fistud:v:37:y:2016:i::p:258-284
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Epstein, Gil S. & Katav-Herz, Shirit, 2019. "Who Is in Favor of Immigration," IZA Discussion Papers 12368, Institute of Labor Economics (IZA).
    2. A. Ghintran & E. González-Arangüena & C. Manuel, 2012. "A probabilistic position value," Annals of Operations Research, Springer, vol. 201(1), pages 183-196, December.
    3. Gil S. Epstein & Shirit Katav Herz, 2019. "Who is in favor of immigration: the wealthy or the poor? the old or the young?," Economics Bulletin, AccessEcon, vol. 39(2), pages 1424-1434.
    4. Góra, Marek & Ruzik-Sierdzińska, Anna, 2018. "Migration with Pension Reform Expectations," IZA Discussion Papers 11960, Institute of Labor Economics (IZA).
    5. Pawel Kaczmarczyk, 2013. "Are immigrants a burden for the state budget? Review paper," EUI-RSCAS Working Papers p0356, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    6. Kaczmarczyk, Pawel, 2015. "Burden or Relief? Fiscal Impacts of Recent Ukrainian Migration to Poland," IZA Discussion Papers 8779, Institute of Labor Economics (IZA).
    7. Giulia Bettin & Agnese Sacchi, 2019. "Health spending in Italy: the impact of immigrants," Working Papers 433, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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