Asymmetric social protection systems with migration

We study the consequences of the coexistence of different social protection systems on contribution rate levels and migration in a two-country model. Before any migration takes place, the levels of contribution rates are chosen by a representative elected in each country. The migration of each agent depends on her anticipation of other agents’ migrations. We show that the richest agents are attracted to the Bismarckian country. The poorest agents tend to migrate toward one country or the other depending on the Beveridgean country contribution rate. The Beveridgean country can set a higher contribution rate to limit the departures of rich agents.