Estimating the impact of immigrants on the host country social security system when return migration is an endogenous choice

Murat Kırdar

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, I examine the impact of immigrants on the social security system in Germany when return migration is an endogenous choice. For this purpose, I develop a dynamic stochastic model of joint return migration and saving decisions that accounts for uncertainty in future employment and income and estimate this model using a longitudinal dataset on immigrants from five different source countries. I find that immigrants make positive net contributions to both the pension and unemployment insurance systems in Germany regardless of their country of origin and age-at-entry. Moreover, the magnitudes of the net contributions are remarkable for certain groups. Return migration plays a critical role in generating these positive net contributions. In a counterfactual, I examine how much exogenous modeling of the return decision, which has been the practice of the literature so far, changes immigrants’ net contributions. Such a restriction causes a serious misestimation of net contributions. I also examine the impact of a counterfactual policy experiment in which financial bonuses are provided conditional on return to certain unemployed immigrants. Such a policy turns out to be ineffective in a number of dimensions.

Keywords: Immigrant Workers; Life Cycle Models and Saving; Social Security and Public Pensions; Unemployment Insurance; Public Policy (search for similar items in EconPapers)
JEL-codes: D91 H55 J61 J65 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-lab and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: ESTIMATING THE IMPACT OF IMMIGRANTS ON THE HOST COUNTRY SOCIAL SECURITY SYSTEM WHEN RETURN MIGRATION IS AN ENDOGENOUS CHOICE (2012)
Working Paper: Estimating the Impact of Immigrants on the Host Country Social Security System When Return Migration is an Endogenous Choice (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:7803

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