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GTAP Resource #7756

"Advancing Dynamic CGE with demographically driven labour markets for short-term rigidity"
Authors: Samyrao, Kisshor


Abstract
Standard Computable General Equilibrium (CGE) models often overstate short-run factor mobility, underestimating the transitional costs of structural shocks. This paper introduces three structural extensions to the GTAP-Dynamic model to capture medium-run rigidities: (1) functional land decomposition (arable vs. pastureland); (2) an asymmetric 12-tier Muscle Labour System (MLS); and (3) a demographically driven labour mobility mechanism that links intersectoral worker reallocation to national age structures. Using Japan as an illustrative case study, we simulate targeted immigration shocks (+1,000 new workers) across distinct occupational categories. The results demonstrate that immigration targeting acute structural bottlenecks (e.g., skilled extraction and agriculture) yields significantly higher GDP and allocative efficiency gains than traditional high-income service paths. Furthermore, we outline a parsimonious methodology to translate national-level CGE factor rewards into sub-regional (prefectural) wage impacts, providing an empirically grounded alternative to explicit spatial modelling.

The model demonstrates the benefits of disaggregating the labour market to better reflect distinct skills types – allowing for the analysis of immigration policies - designed to resolve localized factor scarcities in deeply domestic supply chains. Lowered production costs in these critical nodes are passed down through domestic input-output links, enhancing national competitiveness. Furthermore, the parsimonious spatial mapping approach highlights that national immigration reforms carry highly divergent localized consequences, showing that urban-focused service visas compress metropolitan rewards while primary industry visas alter the purchasing power balance between rural producers and urban consumers.


Resource Details () GTAP Keywords
Category: 2026 Conference Paper
Status: Published
By/In: Presented during the 29th Annual Conference on Global Economic Analysis (Kyoto, Japan)
Date: 2026
Version:
Created: Samyrao, K. (4/13/2026)
Updated: Samyrao, K. (6/10/2026)
Visits: 111
- Demographics
- Economic growth
- Labor market issues
- Migration
- Economic geography
- Advances in quantitative methods
- Baseline development
- Dynamic modeling
- Asia (East)
- Global


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Last Modified: 4/30/2026 12:56:16 PM