Aging and Immigration Policy in a Representative Democracy
AbstractThis paper analyzes how population aging affects immigration policy in rich industrialized countries. It sets up a two-period model of a representative democracy with two overlapping generations. The government’s preferred immigration rate increases with the share of retirees in the population. The paper differentiates between an economy without a pension system and one with pay-as-you-go pensions. As immigrants have more children than natives, the chosen immigration rate is contingent on the design of the pension system. If pension contributions and benefits are set freely by the government, equilibrium immigration is lower than it is in the absence of a pension system. On the contrary, it is higher if the pension level is fixed ex ante to a relatively generous level, since native workers then benefit from sharing the burden of pension contributions with the immigrants.
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Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201018.
Length: 27 pages
Date of creation: 2010
Date of revision:
Publication status: Forthcoming in
Demographic Change; Political Economy; Immigration Policy;
Find related papers by JEL classification:
- J1 - Labor and Demographic Economics - - Demographic Economics
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
This paper has been announced in the following NEP Reports:
- NEP-AGE-2010-05-15 (Economics of Ageing)
- NEP-ALL-2010-05-15 (All new papers)
- NEP-DGE-2010-05-15 (Dynamic General Equilibrium)
- NEP-MIG-2010-05-15 (Economics of Human Migration)
- NEP-POL-2010-05-15 (Positive Political Economics)
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