Impacts of Immigration on Aging Welfare-State

Immigration is often seen as an instrument of adaptation for aging countries. In this paper, we evaluate, using a dynamic general equilibrium model, the contribution of migration policy in reducing the tax burden associated with the aging population in France. Four alternative scenarios, compared to a baseline scenario based on official projections, are simulated with the aim to quantify the immigration effects on the French social protection finances. We show that the age and, to a lesser extent, the skill structure of immigrants are the key feature that mainly determine the effects on social protection finances. Overall, these effects are all the more positive in the short-medium term that the migration policy is selective (in favor of more skilled workers). In the long term, beneficial effects of a selective policy may disappear. But whatever the degree of selectivity of migration policy, the financial gains from more consequent migration flows are relatively moderated in comparison of demographic changes implied. J.E.L. classification number: C68, D58, E60, H55, H68, J61.