Essays on population aging and the political economy of immigration
The dissertation starts from the observation that in all industrialized countries but also in many developing countries populations are aging. Although population aging is global, demographic structures differ widely between regions. Population aging poses a strain on social security systems. In particular it challenges the financial viability of unfunded pension systems in the more developed countries since the number of contributors declines relative to the number of beneficiaries. Along with pension systems and labor market reform, immigration can contribute to counteract this negative fiscal consequence of demographic change. Still, the demand for migrants seems to be limited. The question arises whether demographic change in industrialized countries induces more liberal immigration policies. An increase in the population share of old individuals is likely to increase those individuals' political weight. Therefore, a key question analyzed in this dissertation is how young and old individuals differ with respect to their immigration preferences. The dissertation further models the translation of immigration preferences into policies. It is divided into four essays which are centered around one common political economy perspective. The first two essays set up theoretical models of immigration policy in an aging country. The government's objective function corresponds to the weighted sum of all its voters' utilities. To capture the heterogeneous interests of individuals at different stages of their life cycle, an overlapping generations approach is employed. The economy produces a homogenous good, employing labor and capital. In each period the young individuals supply one unit of labor and receive a wage income that they allocate to consumption and savings. The old individuals supply their savings as capital in production and receive a return which they consume. Immigrants are assumed to be young. Immigration therefore increases labor supply, reducing the return on labor and increasing the return on capital. ...