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The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa)

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  • Edith Sand
  • Assaf Razin

Abstract

In the political-economy debate people express the idea that immigrants are good because they can help pay for the old, thus help sustaining the social security system. In addition, the median voter whose income derives from wages will wish to keep out the immigrants who will depress his/her wage. Therefore the decisive voter will keep migrants out. The paper addresses these two accepted propositions. For this purpose we develop an OLG political economy model of social security and migration to explore how migration policy and a pay-as-you-go (PAYG) social security system are jointly determined. The sub-game perfect Markov , depends on the different patterns of fertility rates among native born and migrants. Our analysis demonstrates that a social security system may change the first proposition significantly because the median voter may opt to bring in migrants to help him/her during retirement. As for the second proposition we get a significantly nuanced version. Not always immigration helps sustain the social security.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13598.

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Date of creation: Nov 2007
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Handle: RePEc:nbr:nberwo:13598

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  1. Benhabib, Jess, 1996. "On the political economy of immigration," European Economic Review, Elsevier, Elsevier, vol. 40(9), pages 1737-1743, December.
  2. Tabellini, Guido, 2000. " A Positive Theory of Social Security," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 102(3), pages 523-45, June.
  3. Razin, A. & Sadka, E., 1999. "Unskilled Migration: a Burden or a Boon for the Welfare State?," Papers, Tel Aviv 8-99, Tel Aviv.
  4. Jim Dolmas & Gregory W. Huffman, 1998. "On the political economy of immigration and income redistribution," Working Papers, Federal Reserve Bank of Dallas 9804, Federal Reserve Bank of Dallas.
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  6. Assaf Razin & Efraim Sadka & Phillip Swagel, 2001. "The Aging Population and the Size of the Welfare State," NBER Working Papers 8405, National Bureau of Economic Research, Inc.
  7. Assaf Razin & Effraim Sadka & Phillip Swagel, 1998. "Tax Burden and Migration: A Political Economy Theory and Evidence," NBER Working Papers 6734, National Bureau of Economic Research, Inc.
  8. Storesletten, Kjetil, 1998. "Sustaining Fiscal Policy Through Immigration," Seminar Papers, Stockholm University, Institute for International Economic Studies 664, Stockholm University, Institute for International Economic Studies.
  9. Assaf Razin & Efraim Sadka, 2004. "Welfare Migration: Is the Net Fiscal Burden a Good Measure of Its Economic Impact on the Welfare of the Native Born Population?," NBER Working Papers 10682, National Bureau of Economic Research, Inc.
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  19. Phillip Swagel & Efraim Sadka & Assaf Razin, 2002. "The Aging of the Population and the Size of the Welfare State," IMF Working Papers, International Monetary Fund 02/68, International Monetary Fund.
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  21. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(4), pages 1335-1374, November.
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Citations

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Cited by:
  1. Razin, Assaf & Sadka, Efraim & Suwankiri, Benjarong, 2010. "Migration and the Welfare State: Dynamic Political-Economy Theory," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7996, C.E.P.R. Discussion Papers.
  2. Razin, Assaf & Sand, Edith, 2009. "Migration-Regime Liberalization and Social Security: Political-Economy Effect," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7310, C.E.P.R. Discussion Papers.
  3. Tim Krieger, 2014. "Public Pensions and Immigration," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 12(2), pages 10-15, 07.
  4. Lena Calahorrano & Philipp an de Meulen, 2011. "Demographics and Factor Flows – A Political Economy Approach," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0299, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Lena Calahorrano, 2011. "Population Aging and Individual Attitudes toward Immigration: Disentangling Age, Cohort and Time Effects," SOEPpapers on Multidisciplinary Panel Data Research 389, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Efraim Sadka & Ben Suwankiri & Assaf Razin, 2010. "The Welfare State and the Skill Mix of Migration: Dynamic Policy Formation," 2010 Meeting Papers, Society for Economic Dynamics 13, Society for Economic Dynamics.

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