AN IMPACT OF MIGRATION ON THE SLOVAK PENSION SYSTEM: A DYNAMIC SIMULATION MODEL

Unprecedented demographic changes which require extensive reform in fiscal systems, social security systems, and other related policies belong to the most intensive research area. Due to conflicting interests between younger and older generations, reform of a pension system is usually politically difficult. The present paper models an impact of immigration in order to improve welfare of both current and future generations. The dynamic general equilibrium overlapping generations (DGE OLG) model of the Slovak pension system proposed by Farkasovsky in 2016 includes several blocks: demographic, labour market, households, firms, and government. The aim of this contribution is to extend the demographic block of the original model by an impact of migration on the revenue of the Slovak pension insurance in order either to sustain current level of the replacement rate or to follow the replacement rate proposed by the European Commission in The ageing 2015 report. The result reveals that the demand for the net migration flows is so high, that in future the decrease of the participation rate, an increase of the levies, and many other measures will become reality.