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Mario Izquierdo, Juan F.

Jimeno
and Juan A. Rojas
ON THE AGGREGATE EFFECTS
OF IMMIGRATION IN SPAIN
2007
Documentos de Trabajo
N.º 0714
ON THE AGGREGATE EFFECTS OF IMMIGRATION IN SPAIN

ON THE AGGREGATE EFFECTS OF IMMIGRATION IN SPAIN
Mario Izquierdo
BANCO DE ESPAÑA
Juan F. Jimeno
BANCO DE ESPAÑA, CEPR AND IZA
Juan A. Rojas
BANCO DE ESPAÑA




Documentos de Trabaj o. N.º 0714
2007


















































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© BANCO DE ESPAÑA, Madrid, 2007

ISSN: 0213-2710 (print)
ISSN: 1579-8666 (on line)
Depósito legal: M.28993-2007
Unidad de Publicaciones, Banco de España

Abstract
This paper presents a dynamic general equilibrium model designed to compute the
aggregate impact of immigration, accounting for relevant supply and demand effects. We
calibrate the model to the Spanish economy, allowing for enough heterogeneity in the
demographic characteristics of immigrant and native workers. We consider an initial steady
state characterized by the age structure of the Spanish population in 1995 and study the
effects of several immigration scenarios on several macroeconomic variables (GDP,
employment, productivity, etc.).
Keywords: Immigration, general equilbrium models.
JEL Codes: E10, F22.



1 IntroductIon
Immigialion lows inlo Wosloin Luiopo accoloialoo sinco lho oaily 1000s. 1hoio
is a signilcanl Looy of ompiiical liloialuio iogaioing lho impacl of immigialion
on lho hosl counliy. Lul mosl of il iofoi lo Anglo-Saxon counliios. Sinco lhoio
aio ioasons lo Lolioyo lhal lho olocls of immigialion may yaiy acioss counliios.
ooponoing upon lho oomogiaphic chaiacloiislics of lho immigianls ano of lho
naliyo woikois ano lho funclioning of lho laLoui maikol. lho oomano foi oco-
nomic analysis ano ompiiical oyioonco on lho oconomic olocls of immigialion
in olhoi iocipionl counliios has signilcanlly incioasoo.
Lioaoly spoaking. lho ouanlilaliyo sluoios of lho impacl of immigialion on
lho hosl counliy can Lo gioupoo inlo lwo calogoiios: i) miciooconomoliic sluoios
of lho impacl of immigianls on lho laLoui maikol poifoimanco of lho naliyo
woikois. ano ii) maciooconomic sluoios Lasoo on lho caliLialion of somo gonoial
oouiliLiium moools lhal. lypically. incoipoialo somo paiamolois oslimaloo Ly
miciooconomoliic sluoios.
1
Among all Wosloin Luiopoan counliios. Spain. liaoilionally an oul-migialion
counliy. has Loon. Ly fai. lho laigosl iocipionl of immigianls: foioign popula-
lion iosioing in Spain. 0.8ò millions (1/ of lolal populalion) in 100ò. wonl up lo
4.1 millions (aiouno 10/ of lolal populalion) in 2006. 1his immigialion Loom
has oxpanooo Lolh aggiogalo supply ano aggiogalo oomano ano plausiLly al-
loioo lho funclioning of lho Spanish laLoui maikol.
2
Honco. immigialion has
1
Examples of the first category are, for instance, Card (2001), Borjas (1999), and Ottaviano
and Peri (2006). For the second category, see Storelestten (2000)
2
Some previous studies on several economic effects of inward migration flows to Spain are
BANCO DE ESPAÑA 9 DOCUMENTO DE TRABAJO N.º 0714
pioLaLly hao signilcanl aggiogalo olocls.
Fiisl. lhoio aio lho oomogiaphic olocls of immigialion. Wosloin Luiopoan
counliios aio going lhiough a oomogiaphic liansilion wilh signilcanl populalion
agoing. Allhough oomogiaphic agoing is nol a now phonomonon. il has now
assumoo unpiocooonloo piopoilions owing lo lho posl-wai LaLy Loom. ano lho
LaLy Lusl lhal followoo. Ono oxliomo caso is Spain. whoio lho aging of lho
LaLy Loom gonoialion ano lho yoiy low loyols of lho foililily ialos. o.g. 1.17
ano 1.2 in 100ò ano 2000 iospocliyoly. aio oxpocloo lo incioaso lho ialio of lho
olooily (6ò ano olooi) oyoi lho lolal populalion fiom 16.06/ in 2004 lo 8ò.6/
Ly 20ò0.
8
As lho ago sliucluio of immigianls is in gonoial youngoi lhan lhal of
lho hosl populalion. lhoio is a populai Loliof lhal a moio gonoious immigialion
policy can incioaso lho woiking-ago populalion ano holp lo ioouco lho ponsion
Luioon of lho olooily Ly 2080-20òò which is whon lho laigo cohoils Loin in lho
60s ano 70s in Spain will Lo ioliioo.
Soconoly. lhoio aio lho olocls of immigialion on lho laLoui maikol. 1hoso
immigialion lows. nol only imply a hugo laLoui supply shock. also alloi lho
skill composilion of lho laLoui foico ano lho funclioning of lho laLoui maikol.
Foi inslanco. immigianl woikois aio lypically iogaiooo as a pioouclion facloi
lhal suLslilulos low skilloo naliyo woikois. whilo il is complomonlaiy of Lolh
physical capilal ano high skilloo naliyo woikois. Also. as lhoii Laigaining powoi
al wago solling is plausiLly lowoi. lhoii wagos. afloi conliolling foi oLsoiyaLlo
Apaiicio ano 1oinos (2000). Collaoo ol al. (2004). Olcina Lconomica ool Iiosioonlo (2006)
ano Caixa Calalunya (2006).
8
1hoso lguios como fiom 1&:··ìnì 1·n·n:n¡h.· oìnì.·ì.·· 1::(
8
BANCO DE ESPAÑA 10 DOCUMENTO DE TRABAJO N.º 0714
chaiacloiislics. aio lypically lowoi.
1hiioly. lhoio aio lho olocls of immigialion on piooucliyily ano long-iun
giowlh. Sinco lho mio-1000s. laLoi piooucliyily giowlh has signilcanlly fallon
in somo Luiopoan counliios ano. mosl nolicoaLly. in Spain.
4
Sinco immigianls
aio lypically omployoo in laLoui inlonsiyo soclois wilh Lolow ayoiago piooucliy-
ily. pail of lho ooclino of laLoui piooucliyily giowlh is lho iosull of a liansiloiy
nogaliyo composilion olocl. Howoyoi. ooponoing on assimilalion palloins of
immigianls. lho sizo of fuluio immigialion lows ano lhoii skill composilion.
lhis olocl on piooucliyily giowlh coulo Lo moio lasling.
1ho compulalion of lhoso aggiogalo olocls of immigialion ioouiios lho uso
of a gonoial oouiliLiium moool capaLlo of accounling foi all lho ioloyanl supply
ano oomano olocls of immigialion. In lhis papoi wo uso a laigo oyoilapping
gonoialions moool. caliLialoo lo lho Spanish oconomy. lo poifoim such an ox-
oiciso. Giyon lho lack of miciooconomic sluoios on lho impacl of immigialion
inlo Spain. wo slail fiom lho Lasic spocilcalion of lhis lypo of moools. liying
lo achioyo sumcionl loxiLilily lo oniich lho moool as moio ompiiical oyioonco
Locomos ayailaLlo. In lhis iospocl. oui appioach lakos as giyon lho ago. foililily
ano skill chaiacloiislics of cuiionl immigianls in Spain. Wo consiooi an inilial
sloaoy slalo chaiacloiizoo Ly lho ago sliucluio of lho Spanish populalion in
100ò ano sluoy lho olocls of soyoial immigialion sconaiios on soyoial macio-
oconomic yaiiaLlos (GDI. omploymonl. piooucliyily. olc.). 1ho sliucluio of lho
papoi is slanoaio. Soclions 2 ano 8 oosciiLo. iospocliyoly. lho moool ano lho
4
Soo Jimono. Moial ano Saiz (2006).
4
BANCO DE ESPAÑA 11 DOCUMENTO DE TRABAJO N.º 0714
caliLialion slialogy: Soclion 4 piosonls lho lnoings ano Soclion ò conlains somo
concluoing iomaiks ano hinls al soyoial iosoaich linos lhal coulo conliiLulo lo
oniich lho moool in lho fuluio.
2 TLe AodeI
2.1 DenograpLIcs
1ho oconomy is populaloo Ly agonls lhal liyo a maximum of 1 poiioos. Lach
agonl is inooxoo Ly ago i. limo t. lypo , ano naliyo slalus :. 1ho inoox :
iopiosonls lho ago of an inoiyioual whon onloiing lho counliy. consoouonlly
a naliyo has : = 1 ano an immigianl is inooxoo Ly : 2. Doponoing on
occupalion , lhoy can Lo moio oi loss piooucliyo ano wo allow foi oiloionl
occupalional oisliiLulion foi naliyos ano immigianls ano honco. oolno .
;,n
as
lho pioLaLilily of haying piooucliyily , conoilional on Loing a naliyo : = 1
oi immigianl : 2. Upon aiiiyal al lho ago of i 1
.
an agonl slails laking
oocisions. Lach inoiyioual is onoowoo wilh 1 unil of limo lhal can Lo allocaloo
lo woik oi loisuio up lo ago 1
1
. Afloi lhis ago agonls ioliio. Lach agonl
facos an ago ooponoonl pioLaLilily of suiyiying Lolwoon ago i ano ago i ÷ 1 al
t oonoloo Ly :
I,|
. 1hon lho unconoilional pioLaLilily of ioaching ago i foi an
inoiyioual lhal has ago · al t is ¬
I
u,|
=

I
|u
:
|,||u
wilh ¬
u
u,|
= 1.
1ho populalion ago gioups of now immigianls moyos accoioing lo lho following
law of molion
ò
BANCO DE ESPAÑA 12 DOCUMENTO DE TRABAJO N.º 0714
·
I,|,;,n
= .
;,n

I,|
if i ÷ 1 = :
whoio 1·
I,|
oonolos lho numLoi of now immigianls al limo t ÷ 1 wilh ago
i ÷ 1. ano lho numLoi of inoiyiouals lhal woio alioaoy in lho counliy oyolyo
accoioing lo
·
I,|,;,n
= :
I,|
·
I,|,;,n
if i ÷ 1 :.
Inoiyiouals in lho lisl ago gioup aio lho chiloion of all inoiyiouals in lho ocon-
omy plus lho immigianls lhal onloi lho counliy wilh ago 1. lhon
·
,|,;,
= .
;,

I

;

n
·
I,|,;,n
/
I,|
÷1·
,|

.
Finally j
I,|,;,n
is lho shaio of ago-i ano lypo-j-n inoiyiouals oyoi lho lolal pop-
ulalion al limo t
j
I,|,;,n
=
·
I,|,;,n

I

;

n
·
I,|,;,n
.
2.2 IreIerences
Al oach poinl in limo agonls aio assumoo lo maximizo lifolimo ulilily. Honco
lho pioLlom of lho lypical agonl lhal al t has ago i = · (· 1
.
) is lo chooso
consumplion ano loisuio |
I,|,;,n
= 1 /
I,|,;,n
lo solyo lho pioLlom
6
BANCO DE ESPAÑA 13 DOCUMENTO DE TRABAJO N.º 0714
'ar
1

Iu

Iu
¬
I
u,|
l(c
I,|Iu,;,n
. /
I,|Iu,;,n
) (1)
suLjocl lo lho following poiioo-Ly-poiioo consliainl
a
I,|,;,n
= (1 ÷r
|
(1 t
|
))(a
I,|,;,n
÷1
|
) ÷n
I,|,;,n
c
I,|,;,n
wilh a
,|,;,n
= 0. a
1,|,;,n
= 0. 1ho oiscounl paiamoloi is . ano is assumoo
lo Lo lho samo foi all agonls. Loiiowing is possiLlo ano agonls accumulalo
assol holoings lo smoolh consumplion oyoi limo. r
|
is lho inloiosl ialo nol
of oopiocialion. a
I,|,;,n
oonolos noxl poiioo assol holoings. n
I,|,;,n
is laLoi
incomo nol of laxos plus liansfois ano t
|
is a piopoilional capilal incomo lax.
Lol c
I,;,n
Lo lho omcioncy inoox. t
ss,|
lho social socuiily piopoilional lax. t
l,|
a piopoilional laLoi incomo lax ano d
I,|,;,n
lho social socuiily Lonolls. Finally
n
|
oonolos ioal wagos poi omcioncy unil. c
I,|,;,n
lho ago spocilc omploymonl
ialo ano 1
|
is lho accioonlal Loouosl iocoiyoo al l. 1hoso consiooialions allow
us lo oolno lho laLoi incomo nol of laxos plus liansfois as
n
I,|,;,n
= n
|
c
I,|,;,n
c
I,;,n
/
I,|,;,n
(1 t
l,|
t
ss
) ÷d
I,|,;,n
2.3 IroductIon TecLnoIogv
Iioouclion in poiioo l is giyon Ly a slanoaio conslanl ioluins lo scalo pioouc-
lion funclion lhal conyoils capilal 1
|
ano laLoi ·
|
inlo oulpul. Compoliliyo
7
BANCO DE ESPAÑA 14 DOCUMENTO DE TRABAJO N.º 0714
lims ionl laLoi ano mako inyoslmonl oocisions so as lo maximizo lho piosonl
yaluo of cuiionl ano fuluio pioll lows. whoio al l aio giyon Ly
H
|
= 1(1
|
. 7
|
·
|
)
.
2
(
1

|
1
|
) n
|
·
|
1
|
suLjocl lo
1
|
= 1
|
(1 c)1
|
1ho FOC aio
c
|
= 1 ÷.
1
|
1
|
r
|
=
1
1
(1
|,
·
|
) ÷
\

(
1

1

)

÷c
|
(1 c) c
|
c
|
n
|
= 1
J
(1
|,
·
|
)
1ho lochnology 7
|
impioyos oyoi limo al a conslanl ialo Locauso of laLoi aug-
monling lochnological chango. 7
|
= (1 ÷`)7
|
.
2.4 Covernnent
1ho goyoinmonl loyios a piopoilional social socuiily lax on laLoi incomo t
ss,|
lo lnanco a Lonoll d
I,|,;,n
poi ioliioo
8
BANCO DE ESPAÑA 15 DOCUMENTO DE TRABAJO N.º 0714
d
1

,|,;
= :ar(1
nIn
. :i:(1
nor
.
rcj
1 ÷`
n
ou
))
whoio `. rcj. n
ou
ano 1
nor
aio lho piooucliyily giowlh. lho logal ioplaco-
monl ialo. somo ayoiago of pasl oainings ano lho maximum ponsion Lonoll
iospocliyoly. Fiom ago 1
1
÷ 1 lo 1. lho ponsion Lonoll is noimalizoo Ly pio-
oucliyily giowlh (1 ÷ `). sinco now ponsions aio gioaloi lhan olo onos. i.o.
d
I,|,;,n
=
J

X
1ho goyoinmonl also loyios a t
|
ano t
l,|
lo lnanco poi capila goyoinmonl
consumplion G
|
such lhal
Þ

n
²

;
1

I1

j
I,|,;,n
n
;,|
c
I,|,;,n
/
I,|,;,n
c
I,;,n
t
ss,|
÷
÷
Þ

n
²

;
1

I1

j
I,|,;,n
(r
|
a
I,|,;,n
t
|
÷n
|
c
I,|,;,n
/
I,|,;,n
c
I,;,n
t
l,|
) =
=
Þ

n
²

;
1

I1

j
I,|,;,n
d
I,|,;,n
÷G
|
.
2.4.1 TLe EquIIILrIun
A ··n¡·ì.ì.· 1n&.|.h:.&n is a lisl of soouoncos of ouanlilios c
I,|,;,n
. /
I,|,;,n
.
a
I,|,;,n
. j
I,|,;,n
. d
I,|,;,n
. ·
|
. 1
|
. piicos n
|
. c
|
. r
|
. social socuiily lax ialos t
ss,|
ano incomo lax ialos such lhal. al oach poinl in limo t:
0
BANCO DE ESPAÑA 16 DOCUMENTO DE TRABAJO N.º 0714
1) lims maximizo piolls
2) agonls maximizo lifolimo ulilily suLjocl lo lho poiioo Luogol consliainls
laking as giyon wagos. lho inloiosl ialo. laxos. social socuiily Lonolls. suiyiyal
pioLaLililios. lho ago sliucluio of lho populalion ano accioonlal Loouosls.
8) lho ago sliucluio of lho populalion j
I,|,;,n
follows lho aggiogalo law of
molion.
4) accioonlal Loouosls aio giyon Ly
1
|
=

n

;

I
j
I,|,;,n
a
I,|,;,n
(1 :
I,|,;
)
(1 ÷:
|
)

n

;

1
I1

j
I,|,;,n
ò) Maikol cloaiing conoilions foi laLoi holos
·
|
=
²

;
1

I1

Þ

n
j
I,|,;,n
c
I,|,;,n
c
I,;,n
/
I,|,;,n
6) Lol aggiogalo woallh Lo
¹
|
=
Þ

n
²

;
1

I1

j
I,|,;,n
a
I,|,;,n
ano 1¹
|
Lo lho nol foioign assol posilion. lhon lho following holos

|
= ¹
|
c
|
1
|
7) lho Luogol consliainl of lho goyoinmonl is salisloo poiioo Ly poiioo
8) ano lho gooo maikol cloaiing conoilion is salisloo
10
BANCO DE ESPAÑA 17 DOCUMENTO DE TRABAJO N.º 0714
1(1
|
. 7
|
·
|
) = C
|
÷1
|
÷C¹1J
|
÷G
|
÷1¹
|
(1 ÷r
|
)1¹
|
.
whoio C¹1J =
\

(
1

1

). lho cuiionl accounl is lho yaiialion of nol foioign assols
(C¹
|
= 1¹
|

|
). ano lho liaoo Lalanco is lho yaiialion of nol foioign
minus incomo fiom lhoso assols (T1
|
= C¹
|
r
|

|
).
3 CaIILratIon
3.1 DenograpLIcs
Lach moool poiioo coiiosponos lo 1 yoai. Agonls ioach aoullhooo al 16 ano
liyo up lo ago 100. afloi which ooalh is coilain. Wo lako lho ago sliucluio of lho
populalion of 100ò as lho inilial conoilion in oiooi lo piopagalo lho populalion
lo lho fuluio. In lhal yoai. lho slock of immigianls iopiosonloo 1/ of lho lolal
populalion. 1his numLoi ano lho facl lhal lhoio is no oala sol ayailaLlo in
oiooi lo know whon oxisling immigianls onloioo lho counliy. loao us lo mako
no oislinclion Lolwoon immigianls ano naliyos in lho inilial sloaoy slalo. In
oiooi lo oLlain lho inilial assol oisliiLulion wo aio implicilly assuming lhal
inoiyiouals liying in lho inilial sloaoy slalo lhink lhal lho populalion will nol
chango.
Afloi 100ò. giyon lho oynamics of foililily ano lho moilalily. wo piopagalo
lho ago sliucluio of lho populalion unlil il Locomos slalionaiy (in lho sonso lhal
lho shaio of oach ago gioup oyoi lho lolal populalion ooos nol chango lhiough
11
BANCO DE ESPAÑA 18 DOCUMENTO DE TRABAJO N.º 0714
limo) unooi soyoial sconaiios aLoul lho immigialion lows.
ò
3.1.1 InnIgratIon FIovs
Oui Lasolino sconaiio lakos lho iopoiloo numLoi of now immigianls in lho
LaLoui Foico Suiyoy (1n·&··ìn J· 1·h|n·.·n ¹·ì.n) which incioasos fiom
88.060 in 1006 lo ò07.ò00 in 200ò. ano fiom 2006 lo 20ò0 lho numLoi of in-
lows oocioasos unlil il solllos aiouno 270.000 immigianls poi yoai.
6
1ho ago
oisliiLulion of lhoso migialion lows aio lakon lo Lo conslanl ano aio compuloo
as follows. 1ho ayailaLlo oala iofois only lo ago gioups of 10 yoais. ano almosl
80 poi conl of lho now immigianls onloi lho counliy wilh loss lhan 40 yoais
of ago. Sinco in oui moool a poiioo is 1 yoai. foi compulalional ioasons. wo
hayo assumoo lhal lhoio aio 40 possiLlo agos al which immigianls can onloi lho
counliy. Fuilhoimoio. lho piopoilion of now immigianls lo oach ago gioup has
Loon oLlainoo Ly llling a socono oiooi polynomial lo lho cuiionl ago oisliiL-
ulion of now immigianls in Spain (soo lisl panol of Figuio 1). Finally. lhoso
immigianls aio assumoo lo hayo lho samo moilalily ano foililily ialo as naliyos.
3.2 IreIerences and HeterogeneItv
1ho poiioo ulilily funclion poi-momLoi of lho housoholo is
n(c. /) =
c
c
I,|,|,n
1 o
c
I,|,|,n
1
/
µ
I,|,|,n
1 ÷j
ò
Foililily ano moilalily ialos aio oLlainoo fiom lho oomogiaphic piojoclions (sconaiio 1)
of lho 1n·ì.ì&ì· An·.·nn| J· 1·ìnJ.·ì.·n.
6
1hoso lguios aio conlomplaloo in lho high-immigialion sconaiio of lho mosl ioconl oo-
mogiaphis foiocasl of lho Spanish Nalional Slalislics Omco .
12
BANCO DE ESPAÑA 19 DOCUMENTO DE TRABAJO N.º 0714
Nolico lhal wo aio implicilly assuming lhal al oach poinl in limo only a pio-
poilion c
I,|,|,n
of housoholo momLois aio omployoo. Lul ils momLois chooso
consumplion ano laLoi (of lhoso who aio omployoo) so as lo maximizo joinl
ulilily unooi lho assumplion lhal omployoo ano non-omployoo momLois onjoy
lho samo consumplion allocalion. 1ho inyoiso of lho olaslicily of suLslilulion
o is 2. 1ho paiamolois j ano 1 has Loon sol such lhal lho ayoiago limo sponl
woiking is aiouno 1´8 ano lho Fiisch olaslicily of laLoi (1´j) is 0.4. Honco wo
uso 1 = 600 ano j = 2.ò. 1ho oiscounl ialo paiamoloi is sol ooual lo = 0.000.
3.2.1 HeterogeneItv
In oiooi lo piopoily accounl foi lho polonlial oiloioncos in piooucliyily Lolwoon
naliyos ano immigianls ano mako alloinaliyo oxpoiimonls concoining lho skills
conlonl of immigialion lows. wo hayo paililionoo inoiyiouals of lho samo gon-
oialion inlo foui possiLlo occupalions (oualiloo non-manual. non-oualiloo non-
manual. oualiloo manual ano non-oualiloo manual). 1ho oisliiLulion of naliyos
ano immigianls woikois Ly lhoso occupalional loyols comos fiom lho Sliucluial
Lainings Suiyoy (SLS) in 2002. sinco infoimalion aLoul lho nalionalily of lho
woikoi was nol ayailaLlo in lho 100ò wayo of lhis suiyoy. Howoyoi. accoioing lo
lho infoimalion ayailaLlo in lho Spanish LaLoui Foico Suiyoy (LFS). lho ois-
liiLulion Ly occupalion of immigianl woikois has iomainoo ioughly conslanl
oyoi lhis poiioo . As can Lo soon in Figuio 1. il is impoilanl lo lako inlo ac-
counl oiloioncos in lho occupalional oisliiLulion of woikois Ly nalionalily giyon
lhal immigianls aio moio conconlialoo lhan naliyos in low-skilloo occupalions.
18
BANCO DE ESPAÑA 20 DOCUMENTO DE TRABAJO N.º 0714
Wo assumo lhal now immigianls onloiing lho counliy unlil 20ò0 mainlain lhis
occupalional oisliiLulion.
Iogaioing piooucliyily. wo allow piooucliyily oiloionlials acioss ago. na-
lionalily ano occupalional loyol. As lho infoimalion aLoul piooucliyily al lho
inoiyioual loyol is nol ayailaLlo. wo pioxy piooucliyily oiloionlials Ly wago
oiloionlials using. as pioyiously. infoimalion fiom SLS in 2002. Wo compulo
houily wagos Ly ago gioups. nalionalily ano occupalional loyol (soo Figuio 1).
Il shoulo Lo nolicoo lhal in lho highosl occupalional loyol wo assumo lhal lho
wago oiloionlial is zoio Lolwoon naliyos ano immigianls.
7
Finally. inoiyiouals. naliyos ano immigianls. aio assumoo lo gol omployoo
wilh a pioLaLilily ooual lo lho omploymonl ialo of lhoii ago gioup. On ayoi-
ago. immigianls piosonl a highoi omploymonl ialo lhan naliyos Lul lhis gap
is mainly ouo lo lhoy aio youngoi. so il is impoilanl lo lako inlo accounl ago
oiloioncos. Inoooo. as can Lo soon in lguio 1. immigianls show slighlly lowoi
omploymonl ialo foi oach ago gioup oxcopl lhoso loss lhan 2ò yoais. Lmploy-
monl ialos aio compuloo using LaLoui Foico Suiyoy oala foi 200ò. Wo uso moio
ioconl infoimalion foi omploymonl ialos in oiooi lo lako inlo accounl lhal now
immigianls onloiing Spain sinco 100ò hayo showoo highoi omploymonl ialos
lhan lho fow immigianls who whoio alioaoy hoio al lhal oalo. Wo lhink lhis
is moio aoooualo in oiooi lo oxliapolalo omploymonl ialos foi now immigianls
unlil 20ò0.
7
Sinco lhoio aio lho yoiy fow oLsoiyalions of immigianls in lhis occupalional loyol. ayailaLlo
oala giyo implausiLlo oslimalos of wago oiloionlials.
14
BANCO DE ESPAÑA 21 DOCUMENTO DE TRABAJO N.º 0714
Figuio 1
0 5 10 15 20 25 30 35 40 45 50 55 60
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
Age distribution of immigration flows
1 2 3 4
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
Occupation Distribution
natives
immigrants
20 25 30 35 40 45 50 55 60
0
0.5
1
1.5
2
2.5
Age distribution of productivity natives
NMQ
NMNQ
MQ
MNQ
20 25 30 35 40 45 50 55 60
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Age profile of employment rates
natives
immigrants

BANCO DE ESPAÑA 22 DOCUMENTO DE TRABAJO N.º 0714
3.3 Covernnent
Ionsion Lonolls aio as follows. Upon ioliiomonl an inoiyioual`s ponsion is
compuloo applying a ioplacomonl ialo oyoi lho ayoiago of oainings of lho lasl
1ò yoais Lofoio ioliiomonl. 1his ioplacomonl ialo is. 0/ if an inoiyioual has
Loon conliiLuling foi loss lhan 1ò yoais. 100/ if ho has conliiLuloo foi al loasl
8ò yoais. ano 60÷2(:-1ò) in poiconl loims if lho inoiyioual has conliiLuloo al
loasl 1ò yoais Lul loss lhan 8ò. whoio : is lho numLoi of conliiLuloo yoais. 1ho
ponsion syslom in Spain also incluoos a maximum ano a minimum ponsion loyol
ooual lo 1.8ò ano 0.44 limos lho poi-capila oulpul in lho Spanish oconomy in
100ò. Howoyoi in lho moool oconomy lhoso limils woio nol Linoing. ouo lo lho
facl lhal wo hayo consiooioo Lioao oualilcalion`s calogoiios. 1ho social socuiily
conliiLulion ialo is sol lo 1ò/ which lho ialio of social socuiily conliiLulions
oyoi laLoi incomo. Nolico lhal wo aio nol imposing (as many papois oo) lho
social socuiily syslom lo Lo Lalancoo.
Wo uso a yaluo of lho capilal incomo lax t
|
= 0.186 as iopoiloo Ly Losca
ol al. (1000) ano sol a goyoinmonl lo oulpul ialio of G´Y = 18/ which is
lho ialio of goyoinmonl consumplion lo GDI in 100ò in Spain. 1ho laLoi lax
ialo t
l,|
is sol onoogonously lo Lalanco lho oyoiall (incluoing lho social socuiily
syslom) goyoinmonl Luogol. In lho inilial sloaoy slalo lho yaluo lhal salislos
lhis conoilion is 28.8/. Il shoulo Lo noloo lhal lho laLoi lax will Lo changing
oyoi limo as a iosull of (among olhoi lhings) possiLlo imLalancos Lolwoon social
socuiily conliiLulions ano oxponoiluios.
16
BANCO DE ESPAÑA 23 DOCUMENTO DE TRABAJO N.º 0714
3.4 IroductIon TecLnoIogv and tLe VorId Interest rate
1ho pioouclion lochnology is CoLL-Douglas
Y
|
= 1(1
|
. 7
|
·
|
) = 1
o
|
(7
|
·
|
)
o
ano lho capilal shaio paiamoloi is c = 0.87ò following lho oslimalos of Domonoch
ano 1aguas (100ò) foi lho Spanish oconomy. 1ho piooucliyily giowlh has Loon
sol lo ` = 1/ in annual loims which is lho ayoiago giowlh of poi-capila con-
sumplion oyoi lho poiioo 1060-100ò. 1ho oopiocialion ialo of capilal c is sol
lo malch lho ayoiago ialio of gioss inyoslmonl oyoi oulpul I´Y=21.7/ which
is lho yaluo of lhis ialio in 100ò. 1his yiolos a yaluo of c = 7/ in annual
loims. 1ho aojuslmonl cosl paiamoloi is consislonl wilh lho oslimalos foi lho
Spanish oconomy of Laicolo (2006) ano Alonso-Loiiogo ano Lonlolila (1004)
ano is ooual lo .=80. Finally lho inloinalional ioal inloiosl ialo is sol so as
lo iopioouco in lho inilial sloaoy slalo a ialio of foioign assols oyoi GDI of
aiouno -10/. 1his laigol gonoialos in lho moool a cuiionl accounl oolcil oyoi
GDI ialio which is slighlly moio nogaliyo lhal lho ono oLsoiyoo in lho oala.
ouo lo lho facl lhal lho moool is assumoo lo Lo in a sloaoy slalo. whilo lhis is
nol nocossaiily lho caso in lho oala.
TaLIe 1: Current Account In tLe AodeI versus SpaIn
Dala 100ò Moool 100ò
Cuiionl Accounl´GDI -0.8/ -0.47/
Nol Foioign Assols´GDI -20/ -10/
17
BANCO DE ESPAÑA 24 DOCUMENTO DE TRABAJO N.º 0714
3.5 ConputatIon AetLod
1ho compulalional piocoouio usoo lo solyo foi lho liansilional oynamics of lho
moool is slanoaio ano follows AuoiLach ano Kollikol (1087).
4 FIndIngs
1o accounling foi lho aggiogalo olocls of immigialion. wo compulo lho oyo-
lulion of maciooconomic yaiiaLlos unooi soyoial sconaiios lhal yaiy in iospocl
lo lho sizo ano composilion of lho immigialion lows. Wo slail compuling a
Lasolino sconaiio chaiacloiizoo Ly lwo main foaluios: i) lho populalion agos
accoioing lo lho oomogiaphic piojoclions spociloo in lho caliLialion. incluoing
lho cuiionl immigialion lows. ano ii) lhoio is a fall in lho inloinalional inloiosl
ialo. In pailiculai wo assumo lhal Lolwoon 100ò ano 200ò ioal inloiosl ialo falls
Ly 1.ò poiconlago poinls. as oLsoiyoo in lho Spanish oconomy ouiing lhis poiioo.
ano lhon incioasos unlil ioaching a loyol consislonl wilh a long loim ooclino of
1 poiconlago poinl. 1his oxpocloo long-loim ooclino in lho ioal inloiosl ialo
is consislonl wilh iosulls fiom ioconl papois lhal hayo aooiossoo lho impacl
of oomogiaphics on lho oyolulion of inloinalional ioal inloiosl ialo.
8
Sinco lho
moool is caliLialoo foi 100ò ano. in lho Lasolino sconaiio wo uso faclual immi-
gianl lows foi lho 200ò. fiom compaiison wilh oLsoiyoo oala wo can oyalualo
lo whal oxlonl lho moool is aLlo lo piooicl lho impacl of immigialion oyoi lho
shoil-iun.
8
Soo. foi inslanco. Kaia ano yon 1haooon (2006) ano Kiuogoi ano Luowig (2006).
18
BANCO DE ESPAÑA 25 DOCUMENTO DE TRABAJO N.º 0714
1o oisonlanglo lho aggiogalo olocls of immigialion fiom lho olocls of lho
chango in lho inloiosl ialo. wo consiooi foui alloinaliyo sconaiios comLining
oiloionl palhs foi immigialion lows an lho ioal inloiosl ialo. In pailiculai. wo
hayo compuloo lyo alloinaliyo casos:
Sconaiio 1 (Lasolino): OLsoiyoo immigialion lows ano a fall in lho inloi-
nalional inloiosl ialo
Sconaiio 2: No immigialion ano a fall in lho inloiosl ialo
Sconaiio 8: No immigialion ano a conslanl inloiosl ialo
Sconaiio 4: An incioaso in immigialion of unskilloo woikois ano a fall in
lho inloiosl ialo
Sconaiio ò: Immigialion lows as in lho Lasolino sconaiio. moio skilloo
immigianls ano a fall in lho inloiosl ialo.
4.1 TLe aggregate eßects oI oLserved InnIgratIon ßovs
In oiooi lo gaugo lho aggiogalo olocls of immigialion lows inlo lho Spanish
oconomy. wo piosonl lho iosulls of lho Lasolino sconaiio in compaiison lo lho caso
of no migialion lows (Sconaiios 1 ano 2). 1o piosonl lho iosulls wo uso soyoial
giaphs. plolling lho oyolulion of somo laLoi maikol yaiiaLlos (wagos. omploy-
monl. ano laLoi supply). somo maciooconomic yaiiaLlos (lho capilal laLoi-ialio.
GDI poi capila. inyoslmonl ano saying ialos. ano lho cuiionl accounl Lalanco
-Lcc-). ano somo yaiiaLlos iolocling lho silualion of lho ponsion syslom (lho
10
BANCO DE ESPAÑA 26 DOCUMENTO DE TRABAJO N.º 0714
ooponooncy ialio -lho ialio of ioliioos lo lho laLoi foico-. ponsions oxponoi-
luios. ano lho Social Socuiily oolcil).
0
Foi somo yoais. yaluos iolocling lho
mosl ioloyanl maciooconomic olocls of immigialion aio also iopoiloo in 1aLlo
2. Foi lhis caso lho iosulls aio in Figuio 2.
Fiom lho compaiison Lolwoon lho lisl lwo sconaiios. wo oiaw lho following
conclusions. Immigialion conliiLuloo Lolh lo lho iiso in omploymonl poi capila
ano lo lho ooclino of laLoi piooucliyily (moasuioo as GDI oyoi omploymonl).
Lolh olocls lono lo cancol oul ano. as a iosull. GDI poi capila luins oul lo
Lo yoiy similai in Lolh sconaiios oyoi lho inilial poiioos of lho liansilion. al-
lhough il incioasos wilh immigialion afloiwaios. 1hoio is nol much oiloionco
Lolwoon Lolh sconaiios in loims of lho Lohayioi of lho saying ialo. Lul lho in-
yoslmonl ialo is suLslanlially highoi in lho oxpoiimonl wilh immigialion lows.
1ho ioason is lhal. wilh immigialion. lho lowoi capilal laLoi ialio incioasos lho
maiginal piooucliyily of capilal ano incioasos lho piollaLilily of inyoslmonl
oocisions. As a Ly piooucl of lhoso lionos. immigialion lows ooliyoi a moio
pionouncoo cuiionl accounl oolcil as poiconlago of GDI. In Sconaiio 2 (No
immigialion). lho aging of lho LaLy Loom gonoialion incioasos lho numLoi of
lho ioliioos oyoi lho lolal populalion inoucing an incioaso in lho social socuiily
lax ialo in oiooi lo Lalanco lho goyoinmonl Luogol. In aooilion. lhoio is somo
ioouclion in lho poiconlago of GDI sponl on ponsions ano lho social socuiily
oolcil in lho sconaiio wilh immigialion lows. which. noyoilholoss. ooos nol
impooo lhal Lolh ponsion oxponoiluios ano lho Social Socuiily oolcil suigos
0
Wagos. GDI poi omployoo. ano GDI poi capila aio oolionooo.
20
BANCO DE ESPAÑA 27 DOCUMENTO DE TRABAJO N.º 0714
lo much highoi loyols lhal lho cuiionl onos. Consoouonlly. lho inlow of immi-
gianls alloyialos. lo a minoi oxlonl. lho olocls of lho aging of lho LaLy-Loom
gonoialion.
As foi lho ouanlilaliyo olocls (soo columns [1[ ano [2[ of 1aLlo 2). lhoso
aio spocially nolicoaLlo in lho caso of omploymonl poi capila (aLoul 2. ò ano
8 pp highoi al 200ò. 2020 ano 20ò0 in Sconaiio 1). 1his is ouo lo lwo olocls:
i) lho conlinuous immigianl lows of lho oiooi of lhoso consiooioo in Sconaiio
1 imply signilcanlly loss populalion agoing lhan unooi no migialion. ano ii)
lho woighl of immigianls. who hayo highoi omploymonl ialos. in lho laLoi foico
incioasos. Foi a similai composilion olocl. GDI poi omployoo is signilcanlly
lowoi ouo lo immigialion. ano also lho impacl accumulalos oyoi limo. As foi
GDI poi capila. lho olocl of immigialion. as alioaoy commonloo. is minoi Lul
incioasos oyoi limo (0.0/. 8.6/. ano 0/ highoi in Sconaiio 1 in 200ò. 2020
ano 20ò0. iospocliyoly). Finally. lho impacl of immigialion on lho inyoslmonl
ialo is signilcanl: aLoul 8 pp highoi al lho lhioo hoiizons piosonloo in 1aLlo 2
(oiminishing oyoi limo ouo lo lho oxislonco of inyoslmonl aojuslmonl cosls).
Wo can oyalualo lho shoil-iun poifoimanco of lho moool Ly compaiing lho
iosulls foi 200ò wilh lho oLsoiyoo oala. Oyoiall. lho moool ioplicalos ouilo woll
lho oyolulion of GDI poi capila. whoso ayoiago annual ialo of giowlh oyoi lho
2000-200ò Loon 2.11/ (2.02/ in lho moool unooi lho Lasolino [1[). Aomillooly.
oyoi lhis poiioo lho moool piooucos a lowoi ialo of giowlh of omploymonl poi
capila (1.08/ annual) ano a highoi ialo of giowlh of laLoui piooucliyily (0.08/
annual) lhan oLsoiyoo (1.70/ ano 0.40/. iospocliyoly). Anolhoi fionl whoio
21
BANCO DE ESPAÑA 28 DOCUMENTO DE TRABAJO N.º 0714
lho moool comos yoiy closo lo ioplicalo lho oLsoiyoo oala oyoi lhis poiioo is
iogaioing lho oyolulion of inyoslmonl: lho inyoslmonl ialo ayoiagoo 27.42/ of
GDI oyoi lho 2000-200ò. whilo lho moool yiolos 27.28/.
22
BANCO DE ESPAÑA 29 DOCUMENTO DE TRABAJO N.º 0714
TaLIe 2. HesuIts
Sconaiio 1 Sconaiio 2 Sconaiio 8 Sconaiio 4 Sconaiio ò
[1[ [2[ [8[ [4[ [ò[
Lmploymonl poi capila (/)
100ò 81.00 81.00 81.00 81.00 81.00
200ò 8ò.22 88.80 88.80 8ò.2ò 8ò.22
2020 8ò.88 80.70 80.70 87.60 8ò.88
20ò0 81.64 24.00 24.00 8ò.ò0 81.64
GDI poi omployoo (oolionooo)
100ò 40.68 40.68 40.68 40.68 40.68
200ò 40.06 41.00 41.88 40.84 41.08
2020 40.8ò 4ò.8ò 42.ò0 88.81 48.02
20ò0 40.77 47.80 44.17 87.08 46.00
GDI poi capila (oolionooo)
100ò 18.00 18.00 18.00 18.00 18.00
200ò 14.11 18.00 18.00 14.22 14.47
2020 14.46 18.06 18.00 14.68 1ò.74
20ò0 12.00 11.84 11.04 18.ò2 14.84
Inyoslmonl´GDI (/)
100ò 21.7ò 21.7ò 21.7ò 21.7ò 21.7ò
200ò 2ò.08 22.10 18.40 27.00 27.22
2020 21.42 18.11 16.16 24.00 22.4ò
20ò0 21.ò4 18.42 16.2ò 28.48 21.ò8
28
BANCO DE ESPAÑA 30 DOCUMENTO DE TRABAJO N.º 0714
Figuio 2 (Dashoo linos: Sconaiio 1. Solio linos: Sconaiio 2)
2000 2020 2040 2060 2080
0.7
0.8
0.9
1
1.1
detrended wages
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. Effective labor supply
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. capital stock
2000 2020 2040 2060 2080
0.5
1
1.5
2
detrended per capita GDP
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
Employment per capi ta
2000 2020 2040 2060 2080
0.3
0.4
0.5
GDP over Employment
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
I/GDP
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
0.4
S/GDP
2000 2020 2040 2060 2080
-0.2
-0.1
0
0.1
0.2
Bcc/GDP
2000 2020 2040 2060 2080
0.2
0.4
0.6
0.8
dependency ratio
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
Pensions over GDP
2000 2020 2040 2060 2080
-0.05
0
0.05
0.1
0.15
0.2
Pension Deficit over GDP
24
BANCO DE ESPAÑA 31 DOCUMENTO DE TRABAJO N.º 0714
4.2 TLe conLIned eßects oI InnIgratIon and oI tLe IaII In
tLe Interest rate
Now wo compaio Sconaiio 1 lo Sconaiio 8 (no immigialion ano a conslanl
inloiosl ialo). 1his compaiison. logolhoi wilh lho iosulls in lho pioyious soclion.
allows us lo oiaw somo conclusions aLoul lho inloiaclion Lolwoon lho olocls of
immigialion ano lho fall of lho inloiosl ialo. 1ho main oualilaliyo oiloionco
is . lhal. unooi a conslanl inloiosl ialo lhoio is a smalloi incioaso in lho slock
of capilal. ouo lo lho highoi cosl associaloo wilh inyoslmonl. Honco. lhoio is
a lowoi incioaso in GDI poi capila. 1ho incioaso in lho inyoslmonl ialo ano
lho fall in lho saying ialo oyoi lho inilial poiioos of lho liansilion. associaloo
lo lho fall in lho inloiosl ialo oisappoai (Figuio 8). ano. consoouonlly. lho
cuiionl accounl Lalanco oisplays a suiplus in lho inilial poiioos of lho liansilion.
In loims of lho oyolulion of social socuiily lnancos. lhoio fall of lho inloiosl
ialo is nol yoiy ioloyanl. as lho mosl impoilanl facloi ooloimining ponsion
oxponoiluios ano lho Social Socuiily oolcil is lho ooponooncy ialio. which oo
nol chango in lho lhioo Sconaiios consiooioo so fai.
Looking al columns [2[ ano [8[ of 1aLlo 2. wo can gaugo how ouanlilaliyoly
impoilanl lho olocl of lho poslulaloo yaiialions of lho inloiosl ialo coulo Lo.
1ho ioouclion of 1.ò pp of lho ioal inloiosl ialo oyoi lho 100ò-200ò omLooooo
in Sconaiio 2 ooos nol alocl yoiy much lo oilhoi omploymonl. piooucliyily oi
GDI poi capila oyoi lho shoil-iun. Howoyoi. as accumulalion of capilal is laigoi
lhan unooi Sconaiio 8. al longoi hoiizons laLoi piooucliyily ano. consoouonlly.
GDI poi capila iiso.

BANCO DE ESPAÑA 32 DOCUMENTO DE TRABAJO N.º 0714
Figuio 8 (Dashoo linos: Sconaiio 1. Solio linos: Sconaiio 8)
2000 2020 2040 2060 2080
0.7
0.8
0.9
1
1.1
detrended wages
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. Effective labor supply
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. capital stock
2000 2020 2040 2060 2080
0.5
1
1.5
2
detrended per capita GDP
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
Employment per capita
2000 2020 2040 2060 2080
0.3
0.4
0.5
GDP over Employment
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
I/GDP
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
0.4
S/GDP
2000 2020 2040 2060 2080
-0.2
-0.1
0
0.1
0.2
Bcc/GDP
2000 2020 2040 2060 2080
0.2
0.4
0.6
0.8
dependency ratio
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
Pensions over GDP
2000 2020 2040 2060 2080
-0.05
0
0.05
0.1
0.15
0.2
Pension Deficit over GDP
26
BANCO DE ESPAÑA 33 DOCUMENTO DE TRABAJO N.º 0714
4.3 TLe eßects oI nore unskIIIed InnIgratIon
In lhis caso. wo compaio lho Lasolino sconaiio. which is consliucloo on lho
oLsoiyoo ano piooicloo lows Ly lho Spanish Nalional Slalislics Omco. wilh an
alloinaliyo sconaiio in which immigialion lows aio poimanonlly highoi. al lho
loyol of 600.000 immigianls poi yoai. Iogaioing lho skill oisliiLulion of lhoso
lows wo koop lhal oLsoiyoo unooi lho Lasolino sconaiio. i.o. lho ono oLsoiyoo
in lho Spanish oconomy in lho ioconl poiioo. Whilo il is yoiy unlikoly lhal
immigialion lows of lhis oiooi of magniluoo can Lo suslainoo oyoi such a long
poiioo of limo. lhis compaiison can giyo us somo inluilion on how lho ioluins
of immigialion oopono on lho sizo of lho lows.
Unooi Sconaiio [4[ lho numLoi of immigianls aiiiying al Spain oyoi lho
2000-20ò0 poiioo is lwico lho numLoi of immigianls lhan unooi Sconaiio [1[. As
a iosull. omploymonl poi capila woulo Lo highoi (only slighlly oyoi lho shoil
ano mooium iun ano moio nolicoaLly al lho 20ò0 hoiizon) Lul al lho cosl of
a suLslanlial ooloiioialion of laLoi piooucliyily (soo Figuio 4). Slill. laigoi
immigialion lows woulo iosull in an incioaso of GDI poi capila of a small
magniluoo. Wilh moio immigialion. lho supply of laLoi incioasos. ano foi lho
ioasons oxplainoo Lofoio. lho inyoslmonl ialo woulo Lo also highoi. wilhoul
oLsoiying any signilcanl chango in lho saying ialo. Consoouonlly. lho cuiionl
accounl oolcil woulo suloi an aooilional ooloiioialion. On lho Lonoll sioo.
lho ooponooncy ialio incioasos loss impoilanlly sinco lho populalion agos loss
ouickly. ano lho oxpocloo incioaso in lho poiconlago of GDI sponl on ponsions
woulo Lo loss pionouncoo.
27
BANCO DE ESPAÑA 34 DOCUMENTO DE TRABAJO N.º 0714
Figuio 4 (Dashoo linos: Sconaiio 1. Solio linos: Sconaiio 4)
2000 2020 2040 2060 2080
0.7
0.8
0.9
1
1.1
detrended wages
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. Effective labor supply
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. capi tal stock
2000 2020 2040 2060 2080
0.5
1
1.5
2
detrended per capita GDP
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
Employment per capita
2000 2020 2040 2060 2080
0.3
0.4
0.5
GDP over Employment
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
I/GDP
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
0.4
S/GDP
2000 2020 2040 2060 2080
-0.2
-0.1
0
0.1
0.2
Bcc/GDP
2000 2020 2040 2060 2080
0.2
0.4
0.6
0.8
dependency ratio
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
Pensions over GDP
2000 2020 2040 2060 2080
-0.05
0
0.05
0.1
0.15
0.2
Pension Deficit over GDP
28
BANCO DE ESPAÑA 35 DOCUMENTO DE TRABAJO N.º 0714
4.4 TLe eßects oI an upgrade In tLe skIII content oI InnI-
gratIon
Wo now koop lho immigialion lows of lho Lasolino sconaiio Lul consiooi a skill
oisliiLulion of lhoso lows moio Liasoo lowaios high skill occupalions as shown
in 1aLlo 8.
TaLIe 3: OccupatIon DIstrILutIon oI InnIgrants
Non-manual Manual
Skilloo Unskilloo Skilloo Unskilloo
Sconaiio 1 18/ 10.8/ 81.ò/ 81.2/
Sconaiio ò 70/ 10/ 10/ 10/
As can Lo soon in Figuio ò ano columns [1[ ano [ò[ of 1aLlo 2. lho mosl
signilcanl olocls aio lo Lo founo in lho oyolulion of GDI poi omployoo. Sinco
in lho lwo sconaiios immigialion lows aio of lho samo oiooi of magniluoo
ano in oui moool omploymonl ialos of immigianl only yaiy Ly ago (ano nol
Ly occupalion). lho skill upgiaoo immigialion has no olocls on omploymonl
poi capila. Howoyoi. GDI poi capila incioasos nolicoaLly (Ly 2.6/. 8.0/ ano
1ò.0/. iospocliyoly. al 200ò. 2020 ano 20ò0) as a iosull of a moio fayoiaLlo
oyolulion of laLoi piooucliyily. which is also impulsoo Ly a laigoi accumulalion
of capilal.
20
BANCO DE ESPAÑA 36 DOCUMENTO DE TRABAJO N.º 0714
Figuio ò (Dashoo linos: Sconaiio 1. Solio linos: Sconaiio ò)
2000 2020 2040 2060 2080
0.8
1
detrended wages
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. Effective labor supply
2000 2020 2040 2060 2080
0.5
1
1.5
2
p.c. capital stock
2000 2020 2040 2060 2080
0.5
1
1.5
2
detrended per capita GDP
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
Employment per capita
2000 2020 2040 2060 2080
0.3
0.4
0.5
GDP over Employment
2000 2020 2040 2060 2080
0.1
0.2
0.3
0.4
I/ GDP
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
0.4
S/GDP
2000 2020 2040 2060 2080
-0.2
-0.1
0
0.1
0.2
Bcc/GDP
2000 2020 2040 2060 2080
0.2
0.4
0.6
0.8
dependency ratio
2000 2020 2040 2060 2080
0
0.1
0.2
0.3
Pensions over GDP
2000 2020 2040 2060 2080
-0.05
0
0.05
0.1
0.15
0.2
Pension Deficit over GDP
80
BANCO DE ESPAÑA 37 DOCUMENTO DE TRABAJO N.º 0714
5 ConcIudIng renarks
Wo hayo poifoimoo soyoial accounling oxoicisos lo gaugo lho aggiogalo olocls
of immigialion unooi oiloionl conoilions. iogaioing lho oyolulion of inloiosl
ialos ano lho skill composilion of immigialion lows. Foi lhal. wo hayo usoo
a oynamic. gonoial oouiliLiium. oyoilapping gonoialions moool caliLialoo lo
lho Spanish oconomy. using as a Lasolino sconaiio lho oomogiaphic piojoclions
cuiionlly onyisagoo Ly lho Spanish Nalional Slalislics Omco. 1his is a ialhoi
slylizoo moool lhal ooos nol accounl foi soyoial facls. woll-oocumonloo in mi-
ciooconomoliic sluoios on lho olocls of immigialion in olhoi counliios Lul nol
yol in Spain. such as oiloionl piofoioncos Lolwoon immigianls ano naliyos io-
gaioing lho consumplion-loisuio choico. lho impoifocl suLslilulion in pioouclion
Lolwoon immigianls ano naliyos. lho impacl of immigianls on lho omploymonl
ialo ano piooucliyily of naliyo woikois. ano lho assimilalion ano ioluin palloins
of immigianls. Dospilo lhoso oiawLacks. lo Lo amonooo as moio miciooconomic
ompiiical oyioonco on lho Spanish oconomy Locomos ayailaLlo. lho iosulls pio-
yioo somo inloiosling insighls on lho magniluoo of lho olocls of immigialion on
omploymonl. piooucliyily. GDI poi capila. inyoslmonl ano saying ialos. ano
lho lnancial posilion of lho ponsion syslom.
1ho main conclusions fiom lhoso oxoicisos aio lho following. Immigialion
incioasos omploymonl lhiough a posiliyo impacl on lho ago sliucluio of lho
populalion ano a composilion olocl (coming fiom highoi oLsoiyoo omploymonl
ialos of lho immigianls). Lul il has a signilcanl nogaliyo olocl on piooucliyily.
so lhal. oyoiall. ils impacl on GDI poi capila. allhough posiliyo. is nol laigo.
81
BANCO DE ESPAÑA 38 DOCUMENTO DE TRABAJO N.º 0714
This negative eect on productivity could be avoided with a skill upgrade of the
composition of immigrant flows. There are also important eects of immigration
on the investment rate, while the impact on the saving rate is less significant.
Finally, none of the immigration scenarios contemplated in this exercise, what-
ever is size or composition, avoid a significant rise in pension expenditures and
a noticeable worsening in the financial situation of the Social Security system.
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BANCO DE ESPAÑA 41 DOCUMENTO DE TRABAJO N.º 0714
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