Assimilation, Immigration, and the Welfare State

This study analyzes the effect of immigration on the pay-as-you-go social security system by incorporating the costs of assimilation. Owing to the costs, the net benefit for the natives by admitting immigrants is not always positive; it increases with the number of immigrants and decreases with increasing costs of assimilation. When the assimilation costs are low, there is a parameter range in the number of immigrants where both the net benefits for the natives and immigrants can be positive. This implies that the number of immigrants and their abilities play an important role when immigrants are admitted.