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ESTIMATING THE IMPACT OF IMMIGRANTS ON THE HOST COUNTRY SOCIAL SECURITY SYSTEM WHEN RETURN MIGRATION IS AN ENDOGENOUS CHOICE *
Author(s) -
Kirdar Murat G.
Publication year - 2012
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2012.00688.x
Subject(s) - unemployment , earnings , economics , immigration , social security , social insurance , german , demographic economics , labour economics , geography , macroeconomics , finance , market economy , archaeology
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.