Working Paper: CEPR ID: DP7310
Authors: Assaf Razin; Edith Sand
Abstract: The pay-as-you-go social security system, burdened by dwindling labour force, can benefit from immigrants, with birth rates that exceed the native-born birth rates. Thus, the social security system effectively provides an incentive to liberalize migration policy through a political-economy mechanism. The paper examines a dynamic political-economy mechanism through which the social security system influences the young decisive voter's attitudes in favour of a more liberal immigration regime. A Markov equilibrium with social security consists of a more liberal migration policy, than a corresponding equilibrium with no social security.
Keywords: demographic imbalance; pay-as-you-go social security system; repeated voting
JEL Codes: F22; H55; J11; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pay-as-you-go social security system (H55) | attitudes of young voters (K16) |
| attitudes of young voters (K16) | immigration policy (K37) |
| pay-as-you-go social security system (H55) | immigration policy (K37) |
| influx of immigrants (J11) | demographic pressures on social security system (J11) |
| immigrants with higher birth rates (J11) | social security system (H55) |
| social security system (H55) | more liberal immigration policies (K37) |