CAFO Working Papers, Centre for Labour Market Policy Research (CAFO), School of Business and Economics, Linnaeus University
Will immigration in the future make it easier to support an ageing population?
Abstract: Sweden and many other Western countries are facing a
demographic development with an ageing population which will burden their
public finances. Already today, the sum of yearly public expenditures in
Sweden is about 50 percent of gross national product (GNP). Will future
immigration alleviate the burden on the welfare system? Immigrants usually
have a low proportion of old people and a high proportion of people of
working age. Calculations for Sweden up to the year 2050 show, however,
that the positive net fiscal contribution of immigrants is small even if
they are well integrated on the labour market. The reason is that future
immigration will increase the size of the population and thereby raise not
only tax receipts but also public expenses. The fiscal impact is sensitive
to immigrants’ integration into the labour market. If, for example, the
rate of labour force participation of future immigrants will be the same as
that of foreign born now living in Sweden, the fiscal consequences would be
negative, but small also in that case. For most years up to 2050, the
calculated positive/negative net contribution effect is less than one
percent of GNP. The same positive net contribution could be achieved
through a better integration of immigrants already living in Sweden.
Keywords: Demography; Forecasting; Immigration; (follow links to similar papers)
JEL-Codes: J11; (follow links to similar papers)
19 pages, February 9, 2010
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