Global Aging and Fiscal Policy with International Labor Mobility

This paper uses an overlapping generations model with international labor mobility and a politically responsive fiscal policy to examine aging in developed and developing regions. Migrant workers change the political structure composed of young and elderly voters in both labor-receiving and labor-sending countries. Numerical simulations show that the developed region benefits more from international labor mobility through the contribution of migrant workers as laborers, savers, and voters. The developing region experiences significant growth in all specifications but benefits more under international capital mobility. Restricting political participation of migrant workers in the developed region produces inferior growth results.Capital flows;Economic models;aging, labor mobility, social security, labor migration, international labor mobility, migrant workers, international migration, elderly, net migration, migrant stock, migrant labor, dependency, social security tax, migration rate, dependency ratios, older people, number of migrants, aging population, welfare state, social security expenditure, free labor mobility, aging society, welfare system, social security system, old age, migration rates, migration of labor, number of immigrants, international labor migration, welfare programs, number of emigrants, ageing, social security taxes