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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: H55 J65 J61 D91 (search for similar items in EconPapers)
Date: 2008-03
New Economics Papers: this item is included in nep-lab and nep-mig
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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https://mpra.ub.uni-muenchen.de/7803/1/MPRA_paper_7803.pdf original version (application/pdf)

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) Downloads
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