Razin and Sadka (1999, 2000) consider a one-off inflow of working-age migrants with
children in a two-generation model. There is an initial gain in pension affordability
because of taxes paid and no effect in future years as immigrants’ descendants cover
pension costs of their parents. Timing effects mean that immigration can be beneficial
to public finances, to the extent that every native generation is better off, even if
immigrants are net beneficiaries over their lifetime. Krieger points out that the
argument is weakened if immigrants are less skilled or have lower fertility rates
(Krieger, 2004) or there is return migration by descendants (Krieger, 2008). The above
argument can be seen as extending this sort of reasoning, suitably modified, to a
continual migrant inflow