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

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  • Razin, Assaf
  • Sand, Edith

Abstract

The pay-as-you-go social security system, burdened by dwindling labour force, can benefit from immigrants, with birth rates that exceed the native-born birth rates. Thus, the social security system effectively provides an incentive to liberalize migration policy through a political-economy mechanism. The paper examines a dynamic political-economy mechanism through which the social security system influences the young decisive voter's attitudes in favour of a more liberal immigration regime. A Markov equilibrium with social security consists of a more liberal migration policy, than a corresponding equilibrium with no social security.

Suggested Citation

  • Razin, Assaf & Sand, Edith, 2009. "Migration-Regime Liberalization and Social Security: Political-Economy Effect," CEPR Discussion Papers 7310, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7310
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    References listed on IDEAS

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    1. Per Krusell & José-Víctor Ríos-Rull, 1996. "Vested Interests in a Positive Theory of Stagnation and Growth," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 301-329.
    2. 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.
    3. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
    4. Alon Cohen & Assaf Razin, 2008. "The Skill Composition of Immigrants and the Generosity of the Welfare State: Free vs. Policy-Controlled Migration," NBER Working Papers 14459, National Bureau of Economic Research, Inc.
    5. Benhabib, Jess, 1996. "On the political economy of immigration," European Economic Review, Elsevier, vol. 40(9), pages 1737-1743, December.
    6. Scholten, Ulrich & Thum, Marcel, 1996. "Public Pensions and Immigration Policy in a Democracy," Public Choice, Springer, vol. 87(3-4), pages 347-361, June.
    7. Edith Sand & Assaf Razin, 2007. "The Role of Immigration in Sustaining the Social Security System: A Political Economy Approach," CESifo Working Paper Series 1979, CESifo.
    8. 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.
    9. 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.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Calahorrano, Lena & an de Meulen, Philipp, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 299, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," CESifo Working Paper Series 2692, CESifo.
    3. repec:zbw:rwirep:0299 is not listed on IDEAS
    4. Zaiceva, A. & Zimmermann, K.F., 2016. "Migration and the Demographic Shift," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 119-177, Elsevier.
    5. Lena Calahorrano & Philipp an de Meulen, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers 0299, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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    More about this item

    Keywords

    Demographic imbalance; Pay-as-you-go social security system; Repeated voting;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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