Modeling an Immigration Shock

Michele Boldrin and Ana Montes ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we model an overlapping generation economy affected by an unexpected immigration shock and determine how households would insure themselves against "immigration risks" efficiently. We use the model to study the impact of immigration on (i) the welfare of various generations, (ii) the distributions 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 efficient complete market allocation. We also show the impact of immigration shocks in a small open economy. In this case, our model suggests that the external capital flows can act as substitutes 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 during 1996 and 2007.

Keywords: social security; human capital; overlapping generations; immigration; trade deficit; risk sharing (search for similar items in EconPapers)
JEL-codes: F22 H53 H55 (search for similar items in EconPapers)
Date: 2013-07-20, Revised 2014-06-20
New Economics Papers: this item is included in nep-dge and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Modeling an immigration shock (2015)
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:pra:mprapa:56765

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