Migration and the Welfare State: Macroeconomics

The developed world in the last few decades has experience an unprecedented demographic change. In virtually all OECD countries, people are getting older—a lot older. The reasons are dramatic baby bust, following the equally dramatic baby boom, and the remarkable increase in life expectancy. Fiscal prospects depend on two factors, in order to mitigate adverse macroeconomic impact of ageing. The first is the potential for capital deepening. The second is increased immigration. This chapter offers a new analytical framework to study the interactions between migration and welfare state policies, driven by ageing.