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The Effect of Immigration on Economic Growth in an Ageing Economy

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  • Joan Muysken
  • Thomas Ziesemer

Abstract

Immigration can help to alleviate the burden ageing presents for the welfare states of most Western Economies. To show this, a macroeconomic model is developed which deals with the effect of both ageing and immigration on economic growth, through home-biased capital accumulation. The model includes a detailed description of the labor market, analyzing the interaction with low-skilled unemployment. The empirical relevance of some crucial model assumptions is shown to hold for the Netherlands, 1973 – 2009, using a vector-error-correction model. Simulations of the latter model show that permanent shocks in immigration will help to alleviate the ageing problem in the long run, as long as the immigrants will be able to participate in the labor force at least as much as the native population. Moreover, the better educated the immigrants are or become, the higher their contribution to growth will be.

Suggested Citation

  • Joan Muysken & Thomas Ziesemer, 2014. "The Effect of Immigration on Economic Growth in an Ageing Economy," Bulletin of Applied Economics, Risk Market Journals, vol. 1(1), pages 35-63.
  • Handle: RePEc:rmk:rmkbae:v:1:y:2014:i:1:p:35-63
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    References listed on IDEAS

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    Cited by:

    1. von Gaessler, Anne Edle & Ziesemer, Thomas, 2016. "Optimal education in times of ageing: The dependency ratio in the Uzawa–Lucas growth model," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 125-142.
    2. Ziesemer, Thomas, 2018. "The serendipity theorem for an endogenous open economy growth model," MERIT Working Papers 2018-001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Edle von Gaessler, Anne & Ziesemer, Thomas, 2017. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," MERIT Working Papers 2017-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    Ageing; Immigration; Unemployment; Skills;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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