Higher population growth increases the size of the working population relative to
pensioners but also increases education costs from the generation coming behind
them. Differentiating the balanced budget equation, we see that it eases public
© 2014 The Authors.
The Economic Journal published by John Wiley & Sons Ltd on behalf of Royal Economic Society.
2014] IMMIGRATION AND PUBLIC FINANCES F583
finances overall for given values of B, T and c if and only if pension costs exceed
education expenses, B > c(1 + n)
2
.