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Demographic Change and Labor Mobility

Marius Bickmann
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Marius Bickmann: TU Dortmund

No 259, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: This paper provides a quantitative analysis of intra-European migration flows between Germany, Southern Europe and Poland along the demographic transition. Migration movements evolve endogenously as a reaction to changes in relative prices induced by population aging. Immigration from Southern Europe and Poland reduces wages in Germany slightly, but alleviates the distortions from social security significantly. This lower elasticity of wages is caused by a large inflow of capital accompanying immigration which counteracts the downward pressure on wages due to a higher labor supply. Welfare effects of endogenous migration flows depend crucially on the policy scenario. If contribution rates remain constant and the burden of adjustment lies on benefits, the negative wage effect dominates leading to moderate welfare losses for future generations in Germany. On the contrary, if tax rates adjust, welfare effects are both positive and larger since immigration serves to stabilize net wages. However, these positive welfare effects in Germany come at the expense of significant welfare losses in the sending regions.

New Economics Papers: this item is included in nep-age, nep-dge, nep-eur and nep-mig
Date: 2017
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