Three essays on population ageing and globalization

Chapter one: Revisiting the issues: Free trade and demographic transition. Over the next several decades, countries around the world will experience varied degrees of population ageing. Their population growth rates are also projected to be unequal across countries. Meanwhile, the accelerating process of globalization is making national markets more and more integrated through international trade. This paper uses an overlapping-generations computable general equilibrium model to investigate the evolution of trade and its welfare implications for two open economies during demographic transitions. Initially, the two economies are assumed to be identical except for the population growth rate. Two scenarios are considered for different patterns of demographic transition. Under both scenarios, one of the two economies becomes comparatively older than the other. The resulting changes of relative factor abundances give rise to different comparative advantages across economies and create incentives for trade. The Armington assumption is applied into the trade model and the two economies are assumed to export and import both capital-intensive and labour-intensive goods. Opposite to the result from related literature, our model shows that the older economy becomes better off and the younger economy becomes worse off after opening to trade. Furthermore, we find that the gap between the welfare levels of two economies is positively correlated with the steady-state population growth rate. Our results cast some light on the continued welfare gap between the developing and the developed world during globalization.Chapter three: An OLG-GE modeling framework for endogenous migration. The new era of international migration is accompanied with accelerating process of population ageing and deeper degree of globalization. Despite more aged developed countries' effort to adopt more immigrants to combat possible negative impacts of ageing, the demand from emerging economies for foreign intelligence is also increasing with the outspread of multinational enterprises and outsourcing. Based on a two-country, three-input and three-generation OLG general equilibrium (GE) model, this paper introduces the concept of endogenous migration into a dynamic OE framework. In the model, the developed and the developing countries are calibrated based on real data and have different paths of population growth. Labour stock in each region is differentiated both by their skill levels and their countries of origin. For the first time in the dynamic OE modeling, we introduce a series of CET (constant elasticity of transformation) equations to capture the supply side of labour market. Population growth has also been endogenized in the model, and each region's population is recalculated based on bilateral migration in each period. Simulation results from our model suggest some stylized facts as observed in the process of globalization. For example, it is shown that more people migrate from the younger countries to the older countries. There will also be wage differentials between native and immigrant workers. Finally, there will be a more significant tendency for workers to move from the developed countries to the developing countries, as a larger economy, with the booming of bilateral trade.Chapter two: International migration, skill composition and population ageing: An OLG-CGE study. Major industrial countries are facing varied degrees of slowing down of labour force growth resulted from population ageing. To fix this problem, many of them are considering adopting more immigrants. Migration is also taken as an option to accommodate other negative impacts of ageing including to alleviate possible fiscal pressure. This paper uses an overlapping-generations general equilibrium model to analyze the impacts of different patterns of international migration on ageing economies. Based on the findings from recent literature, this paper introduces an aspect important in the analysis of migration: international trade is used to investigate the interactions between good mobility and labour mobility. The emphasis has also been put on the heterogeneity of labour and skill composition of immigrants. GTAP6.0 data is applied to calibrate the developed region, the developing region and the rest of the world. Simulation results in this paper suggest migration from the younger developing countries to the older developed countries may not be a win-win game for both of them. An older country could benefit from the inflow of immigrants with higher skill composition. However, the welfare gap between the developed and the developing world will be enlarged as the result of migration of skilled labour. In the paper, the effort of combining international trade and migration proves that good mobility is critical in analyzing international migration: the impacts of migration are well explained by the changes of comparative advantages across countries and terms of trade. This paper also shows that in the context of ageing, trade may be complementary, instead of being substitutable, to migration across countries. International trade increases with the scale and skill composition of migration.