Sustainability of a Pay-as-You-Go Pension System by Dynamic Immigration Control

Posted: 18 Jul 2011 Last revised: 1 Aug 2011

See all articles by Massimo Angrisani

Massimo Angrisani

Sapienza University of Rome

Anna Attias

Sapienza University of Rome

Sergio Bianchi

University of Cassino

Zoltan Varga

affiliation not provided to SSRN

Date Written: July 18, 2011

Abstract

The sustainability of a pay-as-you-go pension system strongly depends on the underlying demographic process determining the inverse old-age dependency ratio (the proportion of the active subpopulation to pensioners), considered as a sustainability index. Based on the classical Leslie population model, a dynamic demographic model including a controlled immigration is set up. A convergent algorithm is given which steers the population towards a demographic equilibrium with a better sustainability index, and at the same time minimizes the yearly immigration. In addition, simulations are provided for Italian data, comparing the demographic dynamics corresponding to different decision scenarios.

Keywords: dynamic demographic model, demographic equilibrium, optimal immigration control

JEL Classification: C61, C63, H55

Suggested Citation

Angrisani, Massimo and Attias, Anna and Bianchi, Sergio and Varga, Zoltan, Sustainability of a Pay-as-You-Go Pension System by Dynamic Immigration Control (July 18, 2011). Available at SSRN: https://ssrn.com/abstract=1888230

Massimo Angrisani

Sapienza University of Rome ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Anna Attias

Sapienza University of Rome ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Sergio Bianchi (Contact Author)

University of Cassino ( email )

Via S. Angelo - Campus Folcara
Dept. of Economics and Law
Cassino, 03043
Italy
+3907762994846 (Phone)
+390776393034 (Fax)

HOME PAGE: http://www.docente.unicas.it/sergio_bianchi

Zoltan Varga

affiliation not provided to SSRN ( email )

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