Population aging, immigration policies, and the social security system in Germany

This thesis provides a dynamic general equilibrium framework to analyze the effects of alternative immigration policies on individual welfare, government finance, and the evolution of population in Germany. I construct heterogeneous agent overlapping generations models with agents differing in age, origin (immigrant or native), and working ability. An exogenous immigration policy determines the proportion of immigrants of each age and skill level as a fixed percentage of the population. Calibrating the model to the German economy, I take into account differences in inter-generational transmission of working ability, fertility, tax payments, and transfer receipts between immigrants and German natives.; The first essay documents the data sources used for the calibration of a rich set of parameters in this thesis, their availability and accessibility. It also provides detailed calculations of fertility, labor productivity, and skill transferability from parents to children.; The second essay quantifies the impacts of immigration policy changes on the evolution of population, public expenditures and receipts, and welfare along the transition to the new balanced growth path. Government transfers per person are endogenously determined. They are equilibrium objects that balance the period-by-period government budget constraint. Income and payroll taxes are modeled as average flat-rate taxes. Experiments show that a higher inflow of low-skilled old immigrants leads to a negligible increase in welfare for natives. However, letting-in only high-skilled young immigrants increases welfare by 1.9 and 1.7 percent for low- and high-skilled natives, respectively.; The third essay provides an extension of the previous model by incorporating the main features of the German social security and tax systems. Here the consumption tax adjusts to balance the government budget. I find that in an economy where pension benefits are indexed to past wages, an increase in immigrant inflow may decrease welfare through the negative impact of declining wages on pensions. However, sufficiently big inflow of high-skilled immigrants (0.8 percent of the population per year) can increase the consumption of retirees by causing a high-enough rise in the return to savings that dominates the decline in pension benefits.