IDEAS home Printed from https://ideas.repec.org/p/mar/magkse/200942.html
   My bibliography  Save this paper

Why Don’t Labor and Capital Flow Between Young and Old Countries?

Author

Listed:
  • Lena Calahorrano

    () (RWTH Aachen University)

  • Philipp an de Meulen

    () (RWTH Aachen University)

Abstract

In this paper we investigate the twofold effect of demographics on international factor flows in a model with endogenous policy constraints on both foreign direct investment and migration. Factor price differences between industrialized and developing countries create economic incentives for migration to developed countries and for capital flows to less developed countries. However, political barriers to immigration in developed countries and expropriation risks in developing countries impede labor and capital flows. Using a political economy approach that takes into account different generations’ conflicting attitudes towards immigration and expropriation, we explore how these policy restrictions interact. We find that, in the presence of mobility constraints, larger demographic differences between countries need not result in an increase of factor flows.

Suggested Citation

  • Lena Calahorrano & Philipp an de Meulen, 2009. "Why Don’t Labor and Capital Flow Between Young and Old Countries?," MAGKS Papers on Economics 200942, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:200942
    as

    Download full text from publisher

    File URL: https://www.uni-marburg.de/en/fb02/research-groups/economics/macroeconomics/research/magks-joint-discussion-papers-in-economics/papers/2009-papers/42-2009_calahorrano.pdf
    File Function: First version, 2009
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Axel Börsch‐Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 151-181, May.
    2. Axel Börsch‐Supan & Florian Heiss & Alexander Ludwig & Joachim Winter, 2003. "Pension Reform, Capital Markets and the Rate of Return," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 151-181, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lena Calahorrano, 2011. "Population Aging and Individual Attitudes toward Immigration: Disentangling Age, Cohort and Time Effects," SOEPpapers on Multidisciplinary Panel Data Research 389, DIW Berlin, The German Socio-Economic Panel (SOEP).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    2. Volker Meier & Martin Werding, 2010. "Ageing and the welfare state: securing sustainability," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 655-673, Winter.
    3. Jochen Zimmermann, 2004. "Wie demographiefest ist die betriebliche Altersvorsorge?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(18), pages 11-18, September.
    4. A Börsch-Supan & A Brugiavini, 2001. "Savings: the policy debate in Europe," Oxford Review of Economic Policy, Oxford University Press, vol. 17(1), pages 116-143, Spring.
    5. Axel H. Boersch-Supan & Joachim K. Winter, 2001. "Population Aging, Savings Behavior and Capital Markets," NBER Working Papers 8561, National Bureau of Economic Research, Inc.
    6. Börsch-Supan, Axel, 2002. "What We Know and What We Do NOT Know," MEA discussion paper series 02017, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    7. Joachim Winter, 2002. "The impact of pension reforms and demography on stock markets," MEA discussion paper series 02021, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    8. Börsch-Supan, Axel & Ludwig, Alexander & Sommer, Mathias, 2005. "Aging and asset prices," Papers 07-29, Sonderforschungsbreich 504.
    9. Jimeno, Juan F. & Rojas, Juan A. & Puente, Sergio, 2008. "Modelling the impact of aging on social security expenditures," Economic Modelling, Elsevier, vol. 25(2), pages 201-224, March.
    10. repec:dau:papers:123456789/13361 is not listed on IDEAS
    11. Vogt, Tobias C. & Kluge, Fanny A., 2015. "Can public spending reduce mortality disparities? Findings from East Germany after reunification," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 7-13.
    12. Axel Börsch-Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi-Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    13. Lucas Bretschger & Karen Pittel, 2005. "Innovative Investments, Natural Resources and Intergenerational Fairness: Are Pension Funds Good for Sustainable Development?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(III), pages 355-376, September.
    14. Tuomas Saarenheimo, 2005. "Ageing, interest rates, and financial flows," Labor and Demography 0508015, University Library of Munich, Germany.
    15. Börsch-Supan, Axel, 2004. "Global Aging: Issues, Answers, More Questions," MEA discussion paper series 04055, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    16. Sánchez-Romero, Miguel & Sambt, Jože & Prskawetz, Alexia, 2013. "Quantifying the role of alternative pension reforms on the Austrian economy," Labour Economics, Elsevier, vol. 22(C), pages 94-114.
    17. Saarenheimo, Tuomas, 2005. "Ageing, interest rates, and financial flows," Research Discussion Papers 2/2005, Bank of Finland.
    18. Ulrich Thießen, 2007. "Aging and Structural Change," Discussion Papers of DIW Berlin 742, DIW Berlin, German Institute for Economic Research.
    19. Fehr, Hans & Habermann, Christian, 2006. "Pension reform and demographic uncertainty: the case of Germany," Journal of Pension Economics and Finance, Cambridge University Press, vol. 5(1), pages 69-90, March.
    20. Börsch-Supan, Axel, 2002. "Eine Blaupause für eine nachhaltige Rentenreform in Deutschland," MEA discussion paper series 02001, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    21. Hendrik Hansen, 2013. "The forecasting performance of mortality models," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 97(1), pages 11-31, January.

    More about this item

    Keywords

    Demographic Change; Political Economy; Migration; Foreign Direct Investment;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mar:magkse:200942. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernd Hayo). General contact details of provider: http://edirc.repec.org/data/vamarde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.