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Migration Challenge for PAYG

  • Gurgen Aslanyan

Immigration has been popularised in the economics literature as a tool to balance the troubled PAYG pension systems. A pivotal research by Razin and Sadka showed that unskilled immigration can surmount the pension problem and, further, boost the general welfare in the host economy. However a large strand of current economics literature is engaged in identifying mechanisms through which unskilled immigration, while solving the pension problem, causes undesired shifts in general welfare. This work shows that actually recurring unskilled immigration may challenge the entire pension system and decrease the pension benefits themselves.

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Paper provided by FIW in its series FIW Working Paper series with number 101.

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Length: 16
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:wsr:wpaper:y:2012:i:101
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Order Information: Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna

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  1. David Blake & Les Mayhew, 2006. "On The Sustainability of the UK State Pension System in the Light of Population Ageing and Declining Fertility," Economic Journal, Royal Economic Society, vol. 116(512), pages F286-F305, 06.
  2. Alexander Kemnitz, 2003. "Immigration, Unemployment and Pensions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(1), pages 31-48, 03.
  3. Muysken Joan & Cörvers Frank & Ziesemer Thomas, 2008. "Immigration can alleviate the ageing problem," Research Memorandum 004, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Razin, Assaf & Sadka, Efraim, 1999. "Migration and pension with international capital mobility," Journal of Public Economics, Elsevier, vol. 74(1), pages 141-150, October.
  5. Kemnitz, Alexander, 2008. "Can immigrant employment alleviate the demographic burden? The role of union centralization," Economics Letters, Elsevier, vol. 99(1), pages 123-126, April.
  6. Krieger, Tim, 2003. "Fertility Rates and Skill Distribution in Razin and Sadka's Migration-Pension Model: A Note," Discussion Papers in Economics 82, University of Munich, Department of Economics.
  7. Razin, A. & Sadka, E., 1999. "Unskilled Migration: a Burden or a Boon for the Welfare State?," Papers 8-99, Tel Aviv.
  8. Yann Algan & Christian Dustmann & Albrecht Glitz & Alan Manning, 2010. "The Economic Situation of First and Second-Generation Immigrants in France, Germany and the United Kingdom," Economic Journal, Royal Economic Society, vol. 120(542), pages F4-F30, 02.
  9. Fanti, Luciano & Gori, Luca, 2010. "Fertility and PAYG pensions in the overlapping generations model," MPRA Paper 25811, University Library of Munich, Germany.
  10. Masatoshi Jinno, 2011. "Assimilation, Immigration, and the Welfare State," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(1), pages 46-63, March.
  11. Casarico, Alessandra & Devillanova, Carlo, 2003. "Social security and migration with endogenous skill upgrading," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 773-797, March.
  12. Felipe SERRANO & Begoña EGUÍA & Jesús FERREIRO, 2011. "Public pensions' sustainability and population ageing: Is immigration the solution?," International Labour Review, International Labour Organization, vol. 150(1-2), pages 63-79, 06.
  13. Fanti, Luciano & Gori, Luca, 2010. "Increasing PAYG pension benefits and reducing contribution rates," Economics Letters, Elsevier, vol. 107(2), pages 81-84, May.
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