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Immigration, Integration and Fiscal Sustainability

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Abstract

Economic theory points out that immigration of even low-skilled immigrants may improve public finances in Western welfare states, and it is some times suggested that fiscal sustainability problems in Western countries caused by ageing populations could be solved by increasing immigration. We examine consequences of various immigration scenarios using the large-scale computable general equilibrium model DREAM describing the Danish economy. It turns out that increased immigration will generally worsen the Danish fiscal sustainability. Improved economic integration of immigrants and their descendants, however, may alleviate the problems of the public sector considerably.

Suggested Citation

  • Poul Schou, 2005. "Immigration, Integration and Fiscal Sustainability," DREAM Working Paper Series 200502, Danish Rational Economic Agents Model, DREAM.
  • Handle: RePEc:dra:wpaper:200502
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    1. Hans Roodenburg & Rob Euwals & Harry ter Rele, 2003. "Immigration and the Dutch economy," CPB Special Publication 47, CPB Netherlands Bureau for Economic Policy Analysis.
    2. George J. Borjas, 1995. "The Economic Benefits from Immigration," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 3-22, Spring.
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    Cited by:

    1. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(2), pages 10-15, 07.
    2. Murat G. Kirdar, 2012. "Estimating The Impact Of Immigrants On The Host Country Social Security System When Return Migration Is An Endogenous Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 453-486, May.
    3. Marianne Frank Hansen & Marie Louise Schultz-Nielsen & Torben Tranæs, 2015. "The Impact of Immigrants on Public Finances: A Forecast Analysis for Denmark," DREAM Working Paper Series 201501, Danish Rational Economic Agents Model, DREAM.
    4. Hugo Benítez-Silva & Eva Cárceles-Poveda & Selçuk Eren, 2011. "Effects of Legal and Unauthorized Immigration on the U.S. Social Security System," Working Papers wp250, University of Michigan, Michigan Retirement Research Center.
    5. Javier Vazquez Grenno, 2010. "Spanish pension system: Population aging and immigration policy," Hacienda Pública Española / Review of Public Economics, IEF, vol. 195(4), pages 37-64, december.
    6. James P. Smith, 2018. "Taxpayer effects of immigration," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-11, October.
    7. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 10-15, July.
    8. Mikkel Christoffer Barslund & Marten von Werder, 2016. "Measuring dependency ratios using National Transfer Accounts," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 14(1), pages 155-186.
    9. Azarnert, Leonid V., 2018. "Refugee resettlement, redistribution and growth," European Journal of Political Economy, Elsevier, vol. 54(C), pages 89-98.
    10. repec:ces:ifodic:v:12:y:2014:i:2:p:19116205 is not listed on IDEAS
    11. N. Renuga Nagarajan & Aurora A. C. Teixeira & Sandra T. Silva, 2021. "Ageing Population: Identifying the Determinants of Ageing in the Least Developed Countries," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 40(2), pages 187-210, April.
    12. Masatoshi Jinno, 2013. "The impact of immigration under the defined-benefit pension system," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 28(21), pages 613-636.
    13. Marianne Frank Hansen & Marie Louise Schultz-Nielsen & Torben Tranæs, 2017. "The fiscal impact of immigration to welfare states of the Scandinavian type," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 925-952, July.
    14. Johannes Berger & Thomas Davoine & Philip Schuster & Ludwig Strohner, 2016. "Cross-country differences in the contribution of future migration to old-age financing," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1160-1184, December.
    15. Marianne Frank Hansen & Marie Louise Schultz-Nielsen & Torben Tranæs, 2017. "The fiscal impact of immigration to welfare states of the Scandinavian type," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 925-952, July.
    16. Gurgen Aslanyan, 2014. "The migration challenge for PAYG," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(4), pages 1023-1038, October.
    17. Krieger, Tim, 2005. "Renten und Zuwanderung: Ein Überblick über neue Ergebnisse der Forschung," Arbeitspapiere der Nordakademie 2005-04, Nordakademie - Hochschule der Wirtschaft.
    18. Ian Preston, 2014. "The Effect of Immigration on Public Finances," Economic Journal, Royal Economic Society, vol. 124(580), pages 569-592, November.
    19. Marek Loužek, 2008. "Zachrání Evropu imigrace? [Will immigration save Europe?]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(3), pages 362-379.
    20. Aurora A. C. Teixeira & N. Renuga Nagarajan & Sandra T. Silva, 2017. "The Impact of Ageing and the Speed of Ageing on the Economic Growth of Least Developed, Emerging and Developed Countries, 1990–2013," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 909-934, August.
    21. Jan Ekberg, 2011. "Will Future Immigration to Sweden Make it Easier to Finance the Welfare System?," European Journal of Population, Springer;European Association for Population Studies, vol. 27(1), pages 103-124, February.

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    More about this item

    Keywords

    immigration; sustainable fiscal policy; CGE models;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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