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Migration-Regime Liberalization and Social Security: Political-Economy Effect

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  • Assaf Razin
  • Edith Sand

Abstract

The pay-as-you-go social security system, which suffers from dwindling labor force, can benefit from immigrants with birth rates that exceed the native-born birth rates in the host country. Thus, a social security system provides effectively an incentive to liberalize migration policy. The paper examines a political- economy, inter-generational, mechanism through which the social security system influences voter attitudes in favor of more liberal immigration regime. We demonstrate that the Markov equilibrium, with social security, consists of more liberal migration policies, than the corresponding Markov equilibrium with no social security.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2653.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2653

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  1. Scholten, Ulrich & Thum, Marcel, 1996. " Public Pensions and Immigration Policy in a Democracy," Public Choice, Springer, vol. 87(3-4), pages 347-61, June.
  2. Edith Sand & Assaf Razin, 2007. "The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa)," NBER Working Papers 13598, National Bureau of Economic Research, Inc.
  3. Cohen, Alon & Razin, Assaf, 2008. "The Skill Composition of Immigrants and the Generosity of the Welfare State: Free vs. Policy-Controlled Migration," CEPR Discussion Papers 7034, C.E.P.R. Discussion Papers.
  4. Lorenzo Forni, 2005. "Social Security as Markov Equilibrium in OLG Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 178-194, January.
  5. Krusell, P. & Rios-Rull, J.V., 1993. "Vested Interests in a Positive Theory of Stagnation and Growth," Papers 547, Stockholm - International Economic Studies.
  6. Benhabib, Jess, 1996. "On the political economy of immigration," European Economic Review, Elsevier, vol. 40(9), pages 1737-1743, December.
  7. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
  8. Thomas F. Cooley & Jorge Soares, 1999. "A Positive Theory of Social Security Based on Reputation," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 135-160, February.
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Cited by:
  1. Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," Quantitative Macroeconomics Working Papers 20906, Hamburg University, Department of Economics.

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