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Sustaining Fiscal Policy through Immigration

2000; University of Chicago Press; Volume: 108; Issue: 2 Linguagem: Inglês

10.1086/262120

1537-534X

Kjetil Storesletten,

Politics, Economics, and Education Policy

Using a calibrated general equilibrium overlapping generations model, which explicity accounts for differences between immigrants and natives, this paper investigates whether a reform of immigration policies alone could resolve the fiscal problems associated with the aging of the baby boom generation. Such policies are found to exist and are characterized by an increased inflow of working‐age high‐and medium‐skilled immigrants. One particular feasible policy involves admitting 1.6 million 40–44‐year‐old high‐skilled immigrants annually. These findings are illustrated by computing the discounted government gain of admitting additional immigrants, conditional on their age and skills.