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Impacts of Immigration on Aging Welfare-State An Applied General Equilibrium Model for France

  • Xavier Chojnicki
  • Lionel Ragot

Immigration is often seen 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 oficial projections, 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 flows of immigrants (corresponding to net migration 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 are the key feature that mainly determine the effects on social protection finances. Overall, these effcts 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 implied.

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File URL: http://economix.fr/pdf/dt/2014/WP_EcoX_2014-33.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-33.

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Length: 37 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:drm:wpaper:2014-33
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.fr
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  1. 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.
  2. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
  3. Storesletten, Kjetil, 1998. "Sustaining Fiscal Policy Through Immigration," Seminar Papers 664, Stockholm University, Institute for International Economic Studies.
  4. Holger Bonin & Bernd Raffelhüschen & Jan Walliser, 2000. "Can Immigration Alleviate the Demographic Burden?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(1), pages 1-, September.
  5. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 705-746, May.
  6. Chojnicki, Xavier & Docquier, Frédéric & Ragot, Lionel, 2005. "Should the U.S. Have Locked the Heaven's Door? Reassessing the Benefits of the Postwar Immigration," IZA Discussion Papers 1676, Institute for the Study of Labor (IZA).
  7. Xavier Chojnicki, 2004. "The economie impact of immigration for the host countries," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 47(1), pages 9-28.
  8. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2013. "Birthplace Diversity and Economic Prosperity," CReAM Discussion Paper Series 1304, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  9. Xavier Chojnicki, 2012. "The fiscal impact of immigration in France: a generational accounting approach," Working Papers 2012-11, CEPII research center.
  10. George J. Borjas, 2003. "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," NBER Working Papers 9755, National Bureau of Economic Research, Inc.
  11. M. Dolores Collado & Iñigo Iturbe Ormaetxe & Guadalupe Valera, 2002. "Quantifying The Impact Of Immigration On The Spanish Welfare State," Working Papers. Serie AD 2002-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  12. Sims, Christopher A, 1990. "Solving the Stochastic Growth Model by Backsolving with a Particular Nonlinear Form for the Decision Rule," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(1), pages 45-47, January.
  13. Xavier Chojnicki, 2011. "Impact budgétaire de l'immigration en France," Revue économique, Presses de Sciences-Po, vol. 62(3), pages 531-543.
  14. DE LA CROIX, David & DOCQUIER, Frédéric, . "School attendance and skill premiums in France and the US: a general equilibrium approach," CORE Discussion Papers RP 1998, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  15. repec:cor:louvrp:-1998 is not listed on IDEAS
  16. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
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