Migration-Regime Liberalization and Social Security: Political-Economy Effect

The pay-as-you-go social security system, which suffers from dwindling labor force, can benefit from immigrants with birth rates that exceed the native-born birth rates in the host country. Thus, a social security system provides effectively an incentive to liberalize migration policy. The paper examines a political- economy, inter-generational, mechanism through which the social security system influences voter attitudes in favor of more liberal immigration regime. We demonstrate that the Markov equilibrium, with social security, consists of more liberal migration policies, than the corresponding Markov equilibrium with no social security.

The Political-Economy Positive Role of the Social Security System in Sustaining Immigration (But Not Vice Versa)

In the political-economy debate people express the idea that immigrants are good because they can help pay for the old, thus help sustaining the social security system. In addition, the median voter whose income derives from wages will wish to keep out the immigrants who will depress his/her wage. Therefore the decisive voter will keep migrants out. The paper addresses these two accepted propositions. For this purpose we develop an OLG political economy model of social security and migration to explore how migration policy and a pay-as-you-go (PAYG) social security system are jointly determined. The sub-game perfect Markov , depends on the different patterns of fertility rates among native born and migrants. Our analysis demonstrates that a social security system may change the first proposition significantly because the median voter may opt to bring in migrants to help him/her during retirement. As for the second proposition we get a significantly nuanced version. Not always immigration helps sustain the social security.

The Role of Immigration in Sustaining the Social Security System: A Political Economy Approach

In the political debate people express the idea that immigrants are good because they can help pay for the old. The paper explores this idea in a dynamic political-economy setup. We characterize sub-game perfect Markov equilibria where immigration policy and pay-as-you-go (PAYG) social security system are jointly determined through a majority voting process. The main feature of the model is that immigrants are desirable for the sustainability of the social security system, because the political system is able to manipulate the ratio of old to young and thereby the coalition which supports future high social security benefits. We demonstrate that the older is the native born population the more likely is that the immigration policy is liberalized; which in turn has a positive effect on the sustainability of the social security system.

On the origins of gender human capital gaps : short and long term consequences of teachers’ stereotypical biases

In this paper, we estimate the effect of primary school teachers’ gender biases on boys’ and girls’ academic achievements during middle and high school and on the choice of advanced level courses in math and sciences during high school. For identification, we rely on the random assignments of teachers and students to classes in primary schools. Our results suggest that teachers’ biases favoring boys have an asymmetric effect by gender—positive effect on boys’ achievements and negative effect on girls’. Such gender biases also impact students’ enrollment in advanced level math courses in high school—boys positively and girls negatively. These results suggest that teachers’ biased behavior at early stage of schooling have long run implications for occupational choices and earnings at adulthood, because enrollment in advanced courses in math and science in high school is a prerequisite for post-secondary schooling in engineering, computer science and so on. This impact is heterogeneous, being larger for children from families where the father is more educated than the mother and larger on girls from low socioeconomic background

Migration-Regime Liberalization and Social Security: Political-Economy Effect

The pay-as-you-go social security system, increasingly burdened by dwindling labor force, can benefit from immigrants whose birth rates exceed those of the native born birth. The paper examines adynamic political-economy mechanism through which the social security system influences the young decisive voter's attitudes in favor of a more liberal immigration regime. A Markov equilibrium with social security consists of a more liberal migration policy, than a corresponding equilibrium with no social security. Thus, the social security system effectively provides an incentive to liberalize migration policy through a political-economy mechanism.

The effect of social networks on students’ academic and non-cognitive behavioural outcomes : evidence from conditional random assignment of friends in school

We investigate the impacts of separating students in Israel from pre-existing social relationships during the transition from elementary to middle school on their academic progress. We define several types of friendships using students’ self-defined friendship nomination and rely for identification on the random assignment of students to classes within a given school. Our results suggest that the number of friends has positive or negative effects on students’ educational outcomes, depending on the type of and on friends’ socioeconomic background. These gains might be partly mediated through greater cooperation, reduction in violent behaviour and improvements in social satisfaction in class

Taxation and Capital Market Liberalization: A Political-Economy Model

This paper investigates the effects of financial liberalization on the welfare state from a politicaleconomy point of view. Most research on the subject does not treat financial liberalization as a political process, but take the changing economic environment as exogenously given. This is the essence of the tax competition literature, which reaches the conclusion that under full capital mobility countries compete over a fixed amount of international capital by undercutting each others’ tax rates, effectively engaging in a "race to the bottom" in tax rates. The present paper addresses these issues, but unlike the basic line of argument of the tax competition literature, it concentrates on the domestic political forces that could have contributed to the process of financial liberalization. Within an OLG political-economy framework, decisions regarding capital tax rates and the extent of capital market liberalization are made concurrently. The model's main result is that when the tax rate on capital income is established in the political process along with the restrictions on capital outflows, and when income of foreign origin cannot be taxed, there is a positive correlation between the two policy decisions. This positive correlation occurs because the tax rate is chosen in the political process so as to offset the effect of capital flight due to less restriction on capital outflows. In addition, the effect of a change in the distribution of income resulting from the aging process is tested. In a closed economy, an increase in the proportion of the population that derives its income from capital lowers the tax rate on capital income. The introduction of an additional policy target, the extent of capital mobility, creates additional forces that have offsetting effects. An increase in the proportion of the elderly generates political pressure for a more liberal capital controls policy. A less restrictive policy toward capital outflows, in turn, leads to heavier capital taxation in order to offset the depletion of the economy's capital-tax base