Aging, Factor Returns, and Immigration Policy

Immigration has various economic and non‐economic effects on the destination country's inhabitants. In this paper, we focus on the impact of immigration on factor returns and analyze how aging affects immigration policy, employing a dynamic political‐economy model of representative democracy. A...

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Bibliographic Details
Published in:Scottish journal of political economy 2011-11, Vol.58 (5), p.589-606
Main Authors: Calahorrano, Lena, Lorz, Oliver
Format: Article
Language:English
Subjects:
Aging
democracy
Democratization
Economic growth
Economic models
Economic theory
Economics
Factor analysis
Growth rate
Immigration
Immigration Policy
Indigenous Populations
Labor Force
Labour force
National security
Political economy
Politics
Representative Democracy
Social Security
Studies
Welfare
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Summary:Immigration has various economic and non‐economic effects on the destination country's inhabitants. In this paper, we focus on the impact of immigration on factor returns and analyze how aging affects immigration policy, employing a dynamic political‐economy model of representative democracy. Aging, that is, a decline in the growth rate of the native population, has an expansionary effect on immigration in this framework. This immigration effect may even overcompensate the initial contraction of the labor force. We show that the immigration rate in the representative democracy equilibrium exceeds the immigration rate that would maximize welfare of current and future generations, and we also discuss the influence of social security on immigration policy.
ISSN:0036-9292
1467-9485
DOI:10.1111/j.1467-9485.2011.00560.x