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Published on: February 2, 2019
Migration and pension
Working Paper Series (National Bureau of Economic Research)
|August 15, 2002
Summary
Young, low-skilled migrants can improve pension system finances. Economic modeling shows that migration benefits all existing age and income groups, making it a Pareto-improving measure for society.
Area of Science:
- Economics
- Demographics
- Public Finance
Background:
- The financial sustainability of pension systems is a growing concern globally.
- The economic impact of migration, particularly low-skilled migration, on social welfare systems is debated.
- Existing models often predict adverse effects of low-skilled migrants on native populations.
Purpose of the Study:
- To analyze the impact of migration on the financial soundness of pension systems.
- To evaluate whether migration can be a Pareto-improving measure.
- To assess the effects of migration on different age and income groups within a society.
Main Methods:
- Utilized a Samuelsonian overlapping generations (OLG) model.
- Incorporated demographic factors and welfare state considerations.
- Analyzed the economic implications of migrant arrivals on existing populations.
Main Results:
- Contrary to static models, migration was found to be a Pareto-improving measure.
- Young migrants, even if low-skilled, contribute positively to pension system finances.
- All existing income (low and high) and age (young and old) groups benefit from migration.
Conclusions:
- Migration can enhance the financial stability of pension systems.
- The integration of migrants can lead to welfare gains for the entire existing population.
- Economic models demonstrate that migration can be a mutually beneficial policy.
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