TY  - JOUR
AU  - Sand,Edith
AU  - Razin,Assaf
TI  - The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa)
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13598
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13598
L1  - http://www.nber.org/papers/w13598.pdf
N1  - Author contact info:
Edith Sand
Eitan Berglas School of Economics
Tel Aviv University
Tel Aviv 69978,
ISRAEL
E-Mail: edith.sand@boi.org.il

Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu
AB  - 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.
ER  -