Immigration Can Alleviate the Aging Problem
28 Pages Posted: 13 Jul 2011
Date Written: July 1, 2011
This paper analyses the way immigration can help to alleviate the burden aging presents for the welfare states of most Western Economies. We develop a macroeconomic framework which deals with the impact of both aging and immigration on economic growth. This is combined with a detailed model of the labor market, to include the interaction with unemployment, while distinguishing between low- and high-skilled labor. The empirical relevance of some crucial model assumptions are shown to hold for the Netherlands, 1973-2005. The conclusions are that immigration will help to alleviate the aging problem, as long as the immigrants will be able to find work. Moreover, the better educated the immigrants are or become, the higher their contribution to growth will be.
Keywords: aging, immigration, unemployment, skills
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