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

Edith Sand () and Assaf Razin

No 13598, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: E6 H1 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-age, nep-lab, nep-mig and nep-pol
Note: IFM PE LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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