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Impacts of Immigration on an Ageing Welfare State: An Applied General Equilibrium Model for France
Author(s) -
Chojnicki Xavier,
Ragot Lionel
Publication year - 2016
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2015.12059
Subject(s) - immigration , population ageing , economics , general equilibrium theory , welfare state , welfare , ageing , immigration policy , demographic economics , applied general equilibrium , population , retirement age , baseline (sea) , macroeconomics , political science , finance , sociology , demography , medicine , market economy , pension , politics , law
Immigration is often seen as an instrument of adaptation for ageing 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 ageing population in France. Four alternative scenarios, compared with a baseline scenario based on official projections, are simulated with the aim of quantifying the effects of immigration on French social protection finances. We show that the age and, to a lesser extent, the skill structure of immigrants are the key features that mainly determine the effects on social protection finances. Overall, these effects are all the more positive in the short to medium term if the migration policy is selective (in favour of more skilled workers). In the long term, the beneficial effects of a selective policy may disappear. But whatever the degree of selectivity of the migration policy, the financial gains from higher consequent migration flows are relatively moderate compared with the demographic changes implied by ageing.