ESTIMATING THE IMPACT OF IMMIGRANTS ON THE HOST COUNTRY SOCIAL SECURITY SYSTEM WHEN RETURN MIGRATION IS AN ENDOGENOUS CHOICE

This article estimates immigrants' fiscal impact on the German pension insurance and unemployment insurance systems when return migration is an endogenous choice. For this purpose, it develops a dynamic stochastic model of joint return migration and saving decisions and estimates it using longi...

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Bibliographic Details
Published in:International economic review (Philadelphia) 2012-05, Vol.53 (2), p.453-486
Main Author: Kirdar, Murat G.
Format: Article
Language:English
Subjects:
Age
Earnings
Economic impact
Employee pension plans
Estimation
Germany
Immigration
Labor markets
Longitudinal studies
Migration
Noncitizens
Purchasing power parity
Retirement
Retirement age
Return migration
Savings
Social security
Stochastic models
Studies
Turkey
Unemployment
Unemployment insurance
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Summary:This article estimates immigrants' fiscal impact on the German pension insurance and unemployment insurance systems when return migration is an endogenous choice. For this purpose, it develops a dynamic stochastic model of joint return migration and saving decisions and estimates it using longitudinal data on immigrants from five countries. The results indicate that exogenous return migration—which has been the practice of the literature so far—underestimates the state coffers' net gain substantially; e.g., the unemployment insurance system's net gain from Turks arriving after age 30 falls by an amount that is roughly equal to their annual earnings at arrival.
ISSN:0020-6598
1468-2354
DOI:10.1111/j.1468-2354.2012.00688.x