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International Journal of Population Studies

RESEARCH ARTICLE

A simulation analysis of the longer-term

effects of immigration on per capita in-

come in an aging population

*
Frank T. Denton and Byron G. Spencer
Department of Economics, McMaster University, L8S 4M4, Hamilton, Ontario, Canada

Abstract: Immigration is a possible instrument for offsetting longer-run adverse effects of
population aging on per capita income. Our “laboratory” is a fictitious country Alpha to which
we assign demographic characteristics typical of a country experiencing population aging. Si-
mulations indicate that a very high immigration rate with heavy concentration in younger
working ages might be required to keep per capita income from declining. More rapid produc-
tivity growth would also offset population aging as would higher rates of labour participation
of older people. Longer life expectancy, taken alone, would lower per capita real income, as
would higher fertility rates.
Keywords: immigration, per capita income, population aging, age structure, simulation

*Correspondence to: Byron G. Spencer, Department of Economics, McMaster University, L8S 4M4, Hamil-
ton, Ontario, Canada; Email: spencer@mcmaster.ca
Received: July 25, 2015; Accepted: September 20, 2015; Published Online: September 26, 2015
Citation: Denton F T and Spencer B G. (2015). A simulation analysis of the longer-term effects of immi-
gration on per capita income in an aging population. International Journal of Population Studies, vol.1(1):
75–93. http://dx.doi.org/10.18063/IJPS.2015.01.006.
1. Introduction

The dominant inducement for immigration policy today in many industrialized countries is
population aging — a shift in age structure toward older ages brought about, during the
th
second half of the 20 century, by a sequence of high fertility rates followed by declining
and then persistently low rates (see Bongaarts, 1999, on the history of fertility rates), and
continuing increases in life expectancy. This is the sequence that has resulted in the pros-
pect of a large proportionate increase in the retired population, a concomitant decrease in
the labour force proportion, and downward pressure on the level of income per capita. The
prospect of population aging is widespread among industrialized countries (Anderson and
Hussey, 2000). The effects will come sooner and be more pronounced for some countries,
Copyright: © 2015 Frank T. Denton later and less pronounced for others, but the changes in age structure and demographic
and Byron G. Spencer. This is an Open outlook are similar in the main, if not in the details and timing.
Access article distributed under the The phenomenon of population aging has been recognized for many years by demo-
terms of the Creative Commons Attribu-
tion-NonCommercial 4.0 International graphers, economists, and others and there has been a variety of approaches used to assess
License (http: //creative-commons.org/ the possible role of immigration as an instrument to offset its negative effects. Attention
licenses/by-nc/4.0/), permitting all non- was given by various authors to population size and age distribution (Bijak, Kupiszewska,
commercial use, distribution, and re-
production in any medium, provided the Kupiszewski et al., 2007, 2008; Loichinger, 2015; Mamolo and Scherbov, 2009; United
original work is properly cited. Nations, 2013), the overall level of economic activity and standard of living (Barrell,

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