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Migration and Pension

  • Assaf Razin
  • Efraim Sadka

Migration has important implications for the financial soundness of the pension system, which is an important pillar of the welfare state. While it is common sense to expect that young migrants, even if low-skilled, can help society pay the benefits to the currently elderly, it may nevertheless be reasonable to argue that these migrants would adversely affect current young since, after all, the migrants are net beneficiaries of the welfare state. In contrast to the adverse effects of low skilled migration in a static model in a Samuelsonian overlapping generations model that migration is a Pareto-improving measure. All the existing income (low and high) and age (young and old) groups living at the time of the migrant's arrival would be better off.

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File URL: http://www.nber.org/papers/w6778.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6778.

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Date of creation: Nov 1998
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Publication status: Published as "Migration and Pension with International Capital Mobility", Journal of Public Economics, Vol. 74, no. 1 (October 1999): 141-150.
Handle: RePEc:nbr:nberwo:6778
Note: PE
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  1. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-56, August.
  2. Peter S. Heller, 1998. "Rethinking Public Pension Reform Initiatives," IMF Working Papers 98/61, International Monetary Fund.
  3. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  4. Razin, Assaf & Sadka, Efraim, 1995. "Resisting Migration: Wage Rigidity and Income Distribution," American Economic Review, American Economic Association, vol. 85(2), pages 312-16, May.
  5. Richard Hemming, 1998. "Should Public Pensions Be Funded?," IMF Working Papers 98/35, International Monetary Fund.
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