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Aging and Immigration Policy in a Representative Democracy

Author

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  • Lena Calahorrano

    () (RWTH Aachen University)

Abstract

This 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.

Suggested Citation

  • Lena Calahorrano, 2010. "Aging and Immigration Policy in a Representative Democracy," MAGKS Papers on Economics 201018, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201018
    as

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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/18-2010_calahorrano.pdf
    File Function: First version, 2010
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    Citations

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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. repec:zbw:rwirep:0299 is not listed on IDEAS
    3. 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.

    More about this item

    Keywords

    Demographic Change; Political Economy; Immigration Policy;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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