Research Seminar by Murat Kirdar (Midle East Technical University): "Estimating the Impact of Immigrants on the Host Country Social Security System when Return Migration is an Endogenous Choice"
Tuesday, May 26 ICEF held the Research Seminar.
Presenter: Murat Kirdar (Midle East Technical University)
Topic: "Estimating the Impact of Immigrants on the Host Country Social Security System when Return Migration is an Endogenous Choice"
Abstract: In this paper, I examine the impact of immigrants on the social security system in Germany when return migration is an endogenous choice. For this purpose, I develop a dynamic stochastic model of joint return migration and saving decisions that accounts for uncertainty in future employment and income and estimate this model using a longitudinal dataset on immigrants from five different source countries. I find that immigrants make positive net contributions to both the pension and unemployment insurance systems in Germany regardless of their country of origin and age-at-entry. Moreover, the magnitudes of the net contributions are remarkable for certain groups. Return migration plays a critical role in generating these positive net contributions. In a counterfactual, I examine how much exogenous modeling of the return decision, which has been the practice of the literature so far, changes immigrants’ net contributions. Such a restriction causes a serious misestimation of net contributions. I also examine the impact of a counterfactual policy experiment in which financial bonuses are provided conditional on return to certain unemployed immigrants. Such a policy turns out to be ineffective in a number of dimensions.
Venue: Pokrovski Bulvar, 11, room Zh-822