Abstract
Economic theory points out that immigration of even low-skilled immigrants may improve public finances in Western welfare states, and it is sometimes suggested that fiscal sustainability problems in Western countries caused by ageing populations could be solved by increasing immigration. We examine consequences of various immigration scenarios using the large-scale computable general equilibrium model Danish rational economic agents model describing the Danish economy. It turns out that increased immigration will generally worsen the Danish fiscal sustainability problem. Improved economic integration of immigrants and their descendants, however, may alleviate the problems of the public sector considerably.
Similar content being viewed by others
References
Bonin H, Raffelhüschen B, Walliser J (2000) Can immigration alleviate the demographic burden? Finanzarchiv 57(1):1–21
Borjas GJ (1994) The economics of immigration. J Econ Lit 32(4):1667–1717
Coleman D, Rowthorn R (2004) The economic effects of immigration into the United Kingdom. Popul Dev Rev 30(4):579–624
Ederveen S, Dekker P, van der Horst A, Joosten W, van der Meer T, Tang P, Coenders M, Lubbers M, Nicolaas H, Scheepers P, Sprangers A, van der Valk J (2004) Destination Europe immigration and integration in the European Union. Annex to the state of the European Union 2005. CPB Netherlands Bureau for Economic Policy Analysis, The Hague
Kemnitz A (2003) Immigration, unemployment and pensions. Scand J Econ 105(1):31–47
Krieger T (2004) Fertility rates and skill distribution in Razin and Sadka's migration–pension model: a note. J Popul Econ 17(1):177–182
OECD (2004) Trends in international migration. OECD, Paris
Razin A, Sadka E (2000) Unskilled migration: a burden or a boon for the welfare state? Scand J Econ 102(3):463–479
Roodenburg H, Euwals R, ter Rele H (2003) Immigration and the Dutch economy. Study report. CPB Netherlands Bureau for Economic Policy Analysis, The Hague
Storesletten K (2000) Sustaining fiscal policy through immigration. J Polit Econ 108(2):300–323
Storesletten K (2003) Fiscal implications of immigration—a net present value calculation. Scand J Econ 105(3):487–506
Acknowledgements
I wish to thank two anonymous referees for valuable comments and Martin Eggert, Cathrine Marie Gruno and Morten Lobedanz Sørensen for skilful research assistance.
Author information
Authors and Affiliations
Corresponding author
Additional information
Responsible editor: Klaus F. Zimmermann
Rights and permissions
About this article
Cite this article
Schou, P. Immigration, integration and fiscal sustainability. J Popul Econ 19, 671–689 (2006). https://doi.org/10.1007/s00148-005-0027-x
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00148-005-0027-x