Pension or Children? Impact of Immigration Policy on Fertility Decision Making and Economic Growth
Date Issued
2008
Date
2008
Author(s)
Fang, I-Hsiang
Abstract
This paper analyzes the effect of introducing immigrants on the tax burden of social security and the economic growth in a model with endogenous fertility. We find that the tax burden will be more widely distributed, thereby enabling the households to retain a larger share of their income. An increase in disposable income would lead to a greater opportunity cost of bearing offspring, and thus parents will choose to have fewer children when immigrants are introduced. Consequently, each child will be allocated with more resources, and receive better education. Higher investment on education accelerates the human capital accumulation, and thus boosts the economic growth. The longer the longevity or the more beneficial the social security system, the greater the effect of introducing immigrants will be. Moreover, if less-educated immigrants are introduced, the tax burden of social security will decrease by a larger amount.
Subjects
Immigration
Endogenous fertility
Social security
Type
thesis
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