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Population Aging and the Macroeconomy: Explorations in the Use of Immigration as an Instrument of Control

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  • Frank T. Denton
  • Byron G. Spencer

Abstract

Simulation methods are employed to explore the effects of immigration as a control instrument to offset the economic and demographic consequences of low fertility rates and aging population distribution. A neoclassical economic growth model is coupled with a demographic projection model. The combined model is calibrated and used in a series of experiments. The experiments are designed to generate the time paths of a hypothetical but realistic economic-demographic system under alternative assumptions about immigration policy. The government seeks to optimize policy results in the model, according to a specified criterion function. The model is calibrated with Canadian data but some experiments are carried out using initial populations and fertility rates of other countries.

Suggested Citation

  • Frank T. Denton & Byron G. Spencer, 2005. "Population Aging and the Macroeconomy: Explorations in the Use of Immigration as an Instrument of Control," Social and Economic Dimensions of an Aging Population Research Papers 135, McMaster University.
    • Handle: RePEc:mcm:sedapp:135
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    References listed on IDEAS

    as
    1. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 300-323, April.
    2. Denton, Frank T & Spencer, Byron G, 1974. "Some Aspects of Economic Adjustments through Migration Flows," Economic Journal, Royal Economic Society, vol. 84(336), pages 868-885, December.
    3. Carl Schmertmann, 2012. "Stationary populations with below-replacement fertility," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 26(14), pages 319-330.
    4. Zheng Wu & Nan Li, 2003. "Immigration and the dependency ratio of a host population," Mathematical Population Studies, Taylor & Francis Journals, vol. 10(1), pages 21-39.
    5. Thomas Espenshade & Leon Bouvier & W. Arthur, 1982. "Immigration and the stable population model," Demography, Springer;Population Association of America (PAA), vol. 19(1), pages 125-133, February.
    6. S. Mitra, 1990. "Immigration, below-replacement fertility, and long-term national population trends," Demography, Springer;Population Association of America (PAA), vol. 27(1), pages 121-129, February.
    7. S. Mitra, 1983. "Generalization of the immigration and the stable population model," Demography, Springer;Population Association of America (PAA), vol. 20(1), pages 111-115, February.
    8. Carl Schmertmann, 1992. "Immigrants’ ages and the structure of stationary populations with below-replacement fertility," Demography, Springer;Population Association of America (PAA), vol. 29(4), pages 595-612, November.
    9. Denton, Frank T & Spencer, Byron G, 1973. "A Simulation Analysis of the Effects of Population Change on a Neoclassical Economy," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 356-375, Part I, M.
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    Cited by:

    1. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.

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    More about this item

    Keywords

    immigration; macroeconomy; aging population; low fertility;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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