The Dynamic Effects of Changes to Japanese Immigration Policy

Kerk L. Phillips

MPRA Paper from University Library of Munich, Germany

Abstract: This paper constructs a multi-sector dynamic general equilibrium model for a trading economy. We incorporate three major factors of production: capital, skilled labor & unskilled labor. We solve and calibrate the model using data from Japan. We then consider changes to immigration policy. We are able to examine the effects on output, consumption, wages, and utility. We do this for both the new steady state and for the time-path leading to that steady state. In addition, we are able, if we so wish, to impose a series of unrelated macroeconomic shock to the model. This has the advantage of allowing us to calculate confidence bands around our policy impulse response functions. We find that allowing skilled labor to immigrate leads to greater welfare gains in the steady state. However, even with exclusively unskilled immigration, existing workers are made slightly better off on average when immigration restrictions are relaxed. We also show that there is a great deal of uncertainty surrounding the exact time path to a new steady state in the presence of the typical fluctuations associated with business cycles. We find a great deal of inertia in the transition to a new steady state.

Keywords: labor migration; factor mobility; dynamic general equilibrium; Japan (search for similar items in EconPapers)
JEL-codes: F15 F22 F42 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-dge and nep-mig
References: View references in EconPapers View complete reference list from CitEc
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https://mpra.ub.uni-muenchen.de/23673/1/MPRA_paper_23673.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/23683/1/MPRA_paper_23683.pdf revised version (application/pdf)

Related works:
Working Paper: The Dynamic Effects of Changes to Japanese Immigration Policy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:23673

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