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The effect of net immigration on economic growth in an ageing economy: transitory and permanent shocks

  • Muysken, Joan

    ()

    (School of Business and Economics, Maastricht University)

  • Ziesemer, Thomas

    ()

    (UNU-MERIT, and School of Business and Economics, Maastricht University)

This paper argues that immigration can help to alleviate the burden ageing presents for the welfare states of most Western Economies. We develop a macroeconomic framework which deals with the impact of both ageing and immigration on economic growth. This is combined with a detailed model of the labour market, to include 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. The conclusions from the analysis of transitory and permanent shocks are that immigration will help to alleviate the ageing problem in the long run, as long as the immigrants will be able to participate in the labour 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.

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File URL: http://www.merit.unu.edu/publications/wppdf/2011/wp2011-055.pdf
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Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 055.

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Date of creation: 2011
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Handle: RePEc:unm:unumer:2011055
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