Modeling an immigration shock

Michele Boldrin and Ana Montes ()

European Economic Review, 2015, vol. 74, issue C, 190-206

Abstract: In this paper, we model an overlapping generation economy affected by an unexpected immigration shock and determine how households may insure themselves against “immigration risk”. We use the model to study the impact of immigration on (i) the welfare of different generations, (ii) the distribution of income among factors of production, and (iii) the optimal design of the intergenerational welfare state. In particular, we construct a system of public education and public pensions that mimics the efficient complete market allocation. We also consider the impact of immigration shocks in a small open economy. In this case, our model suggests that the external capital flow can act as a substitute for the missing private insurance markets. Our analysis delivers a set of predictions that we find useful for understanding certain aspects of the Spanish experience between 1996 and 2008.

Keywords: Social security; Human capital; Immigration; Trade deficit; Risk sharing (search for similar items in EconPapers)
JEL-codes: E25 F22 H53 H55 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Modeling an Immigration Shock (2014)
Working Paper: Modelling an Immigration Shock (2013)
Working Paper: Modeling the Immigration Shock (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:74:y:2015:i:c:p:190-206

DOI: 10.1016/j.euroecorev.2014.11.012

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