IDEAS home Printed from https://ideas.repec.org/p/mar/magkse/200926.html
   My bibliography  Save this paper

Aging, Factor Returns, and Immigration Policy

Author

Listed:
  • Lena Calahorrano

    (RWTH Aachen University)

  • Oliver Lorz

    (RWTH Aachen University)

Abstract

In this note we analyze how aging affects immigration policy. We set up a dynamic political-economy model of representative democracy in which the government of the destination country sets the immigration level to maximize aggregate welfare of the constituency. Aging, i.e. a decline in the growth rate of the native population, has an expansionary effect on immigration. This immigration effect may even overcompensate the initial decline in population growth such that the total labor force grows more strongly and the capital stock per worker declines. We also compare our results to the social planner allocation and to the median-voter equilibrium.

Suggested Citation

  • Lena Calahorrano & Oliver Lorz, 2009. "Aging, Factor Returns, and Immigration Policy," MAGKS Papers on Economics 200926, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:200926
    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/26-2009_calahorrano.pdf
    File Function: First version, 2009
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Karin Mayr, 2007. "Immigration and income redistribution: A political economy analysis," Public Choice, Springer, vol. 131(1), pages 101-116, April.
    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.
    3. Assar Lindbeck & Jörgen Weibull, 1987. "Balanced-budget redistribution as the outcome of political competition," Public Choice, Springer, vol. 52(3), pages 273-297, January.
    4. 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.
    5. J. Amegashie, 2004. "A political economy model of immigration quotas," Economics of Governance, Springer, vol. 5(3), pages 255-267, November.
    6. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 10-15, July.
    7. Coughlin, Peter J & Mueller, Dennis C & Murrell, Peter, 1990. "Electoral Politics, Interest Groups, and the Size of Government," Economic Inquiry, Western Economic Association International, vol. 28(4), pages 682-705, October.
    8. Benhabib, Jess, 1996. "On the political economy of immigration," European Economic Review, Elsevier, vol. 40(9), pages 1737-1743, December.
    9. Gil Epstein & Shmuel Nitzan, 2006. "The struggle over migration policy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(4), pages 703-723, October.
    10. Yann Algan & Christian Dustmann & Albrecht Glitz & Alan Manning, 2010. "The Economic Situation of First and Second-Generation Immigrants in France, Germany and the United Kingdom," Economic Journal, Royal Economic Society, vol. 120(542), pages 4-30, February.
    11. Anna Maria Mayda, 2006. "Who Is Against Immigration? A Cross-Country Investigation of Individual Attitudes toward Immigrants," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 510-530, August.
    12. George J. Borjas, 2021. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 9, pages 235-274, World Scientific Publishing Co. Pte. Ltd..
    13. Mazza, Isidoro & van Winden, Frans, 1996. "A Political Economic Analysis of Labor Migration and Income Redistribution," Public Choice, Springer, vol. 88(3-4), pages 333-363, September.
    14. Joshua D. Angrist & Adriana D. Kugler, 2003. "Protective or counter-productive? labour market institutions and the effect of immigration on eu natives," Economic Journal, Royal Economic Society, vol. 113(488), pages 302-331, June.
    15. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    16. repec:hal:spmain:info:hdl:2441/536kq4edtr82jqovubq3ttobc5 is not listed on IDEAS
    17. Haupt, Alexander & Peters, Wolfgang, 1998. "Public Pensions and Voting on Immigration," Public Choice, Springer, vol. 95(3-4), pages 403-413, June.
    18. Edith Sand & Assaf Razin, 2007. "The Role of Immigration in Sustaining the Social Security System: A Political Economy Approach," CESifo Working Paper Series 1979, CESifo.
    19. Ortega Francesc, 2010. "Immigration, Citizenship, and the Size of Government," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-40, March.
    20. Edith Sand & Assaf Razin, 2007. "The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa)," NBER Working Papers 13598, National Bureau of Economic Research, Inc.
    21. Gonzalez-Eiras, Marti­n & Niepelt, Dirk, 2008. "The future of social security," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 197-218, March.
    22. Yann Algan & Christian Dustmann & Albrecht Glitz & Allan Manning, 2010. "The Economic Situation of First ans Second-Generation in France, Germany, and the United Kingdom," Post-Print hal-03393490, HAL.
    23. Harrie Verbon & Lex Meijdam, 2008. "Too many migrants, too few services: a model of decision-making on immigration and integration with cultural distance," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 665-677, July.
    24. Giovanni Facchini & Anna Maria Mayda, 2008. "From individual attitudes towards migrants to migration policy outcomes: Theory and evidence [‘Immigration policy, assimilation of immigrants and natives’ sentiments towards immigrants: Evidence fr," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(56), pages 652-713.
    25. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
    26. Jim Dolmas & Gregory W. Huffman, 2004. "On The Political Economy Of Immigration And Income Redistribution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1129-1168, November.
    27. O'Rourke, Kevin H. & Sinnott, Richard, 2006. "The determinants of individual attitudes towards immigration," European Journal of Political Economy, Elsevier, vol. 22(4), pages 838-861, December.
    28. Facchini, Giovanni & Willmann, Gerald, 2005. "The political economy of international factor mobility," Journal of International Economics, Elsevier, vol. 67(1), pages 201-219, September.
    29. Hansen, Jorgen Drud, 2003. "Immigration and income redistribution in welfare states," European Journal of Political Economy, Elsevier, vol. 19(4), pages 735-746, November.
    30. Scholten, Ulrich & Thum, Marcel, 1996. "Public Pensions and Immigration Policy in a Democracy," Public Choice, Springer, vol. 87(3-4), pages 347-361, June.
    31. Lorz, Jens Oliver, 1999. "Social security and redistribution within generations in an overlapping generations model," Kiel Working Papers 957, Kiel Institute for the World Economy (IfW Kiel).
    32. Lorenzo Forni, 2005. "Social Security as Markov Equilibrium in OLG Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 178-194, January.
    33. Krusell, Per & Quadrini, Vincenzo & Rios-Rull, Jose-Victor, 1997. "Politico-economic equilibrium and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 243-272, January.
    34. Yann Algan & Christian Dustmann & Albrecht Glitz & Allan Manning, 2010. "The Economic Situation of First ans Second-Generation in France, Germany, and the United Kingdom," Post-Print hal-03393490, HAL.
    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. Calahorrano, Lena & an de Meulen, Philipp, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 299, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Lopez-Velasco, Armando R., 2016. "Solving dynamic inefficiency with politically sustainable guest worker programs," Economics Letters, Elsevier, vol. 148(C), pages 1-4.
    3. repec:zbw:rwirep:0299 is not listed on IDEAS
    4. Zaiceva, A. & Zimmermann, K.F., 2016. "Migration and the Demographic Shift," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 119-177, Elsevier.
    5. Calahorrano Lena & an de Meulen Philipp, 2015. "The Interdependence of Immigration Restrictions and Expropriation Risk," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(4), pages 2047-2077, October.
    6. Lena Calahorrano & Philipp an de Meulen, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 0299, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Lopez-Velasco, Armando R., 2024. "Markov equilibrium of social security: An analytic solution under CRRA utility and the future of social security," Economic Modelling, Elsevier, vol. 132(C).

    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. 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).
    2. Lena Calahorrano & Philipp an de Meulen, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 0299, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Calahorrano, Lena & an de Meulen, Philipp, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 299, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. repec:zbw:rwirep:0299 is not listed on IDEAS
    5. Noel Gaston & Douglas R. Nelson, 2013. "Bridging Trade Theory And Labour Econometrics: The Effects Of International Migration," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 98-139, February.
    6. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2011. "Do interest groups affect US immigration policy?," Journal of International Economics, Elsevier, vol. 85(1), pages 114-128, September.
    7. Giuseppe Russo, 2011. "Voting over selective immigration policies with immigration aversion," Economics of Governance, Springer, vol. 12(4), pages 325-351, December.
    8. Gaston, Noel & Rajaguru, Gulasekaran, 2013. "International migration and the welfare state revisited," European Journal of Political Economy, Elsevier, vol. 29(C), pages 90-101.
    9. Efraim Sadka & Ben Suwankiri & Assaf Razin, 2010. "The Welfare State and the Skill Mix of Migration: Dynamic Policy Formation," 2010 Meeting Papers 13, Society for Economic Dynamics.
    10. Milo Bianchi, 2013. "Immigration Policy and Self-Selecting Migrants," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(1), pages 1-23, February.
    11. Assaf Razin & Efraim Sadka & Benjarong Suwankiri, 2009. "Migration and the Welfare State: A Dynamic Political-Economy Theory," NBER Working Papers 15597, National Bureau of Economic Research, Inc.
    12. Bertrand CRETTEZ, 2011. "Is Selling Immigration Rights Politically Sustainable ?," Discussion Papers (REL - Recherches Economiques de Louvain) 2011042, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    13. Hanson, Gordon H., 2010. "International Migration and the Developing World," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4363-4414, Elsevier.
    14. Paolo E. Giordani & Michele Ruta, 2016. "Self-confirming immigration policy," Oxford Economic Papers, Oxford University Press, vol. 68(2), pages 361-378.
    15. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(2), pages 10-15, 07.
    16. Tim Krieger, 2014. "Public Pensions and Immigration," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(02), pages 10-15, July.
    17. Russo, Giuseppe & Salsano, Francesco, 2019. "Electoral systems and immigration," European Journal of Political Economy, Elsevier, vol. 60(C).
    18. Suwankiri, Benjarong & Razin, Assaf & Sadka, Efraim, 2016. "The welfare state and migration: A dynamic analysis of political coalitions," Research in Economics, Elsevier, vol. 70(1), pages 122-142.
    19. Facchini, Giovanni & Mayda, Anna Maria & Mishra, Prachi, 2007. "Do Interest Groups Affect Immigration?," IZA Discussion Papers 3183, Institute of Labor Economics (IZA).
    20. Giordani, Paolo E. & Ruta, Michele, 2013. "Coordination failures in immigration policy," Journal of International Economics, Elsevier, vol. 89(1), pages 55-67.
    21. Razin, Assaf & Sand, Edith, 2009. "Migration-Regime Liberalization and Social Security: Political-Economy Effect," CEPR Discussion Papers 7310, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Demographic change; political economy; immigration policy;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

    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:200926. See general information about how to correct material in RePEc.

    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 bibliographic 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.

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

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.