Tax Burden and Migration: a Political Economy Theory and Evidence

By A. Razin, Effraim Sadka, P. Swagel. 2002

289 citations recorded by the source corpus.

The extent of taxation and redistribution policy is generally determined as a political-economy equilibrium by a balance between those who gain from higher taxes/transfers and those who lose. In a stylized model of migration and human capital formation, we show -- somewhat against the conventional wisdom -- that low-skill immigration may lead to a lower tax burden and less redistribution than would be the case with no immigration, even though migrants (naturally) join the pro-tax/transfer coalition. Data on 11 European countries over the period 1974 to 1992 are consistent with the implications of the theory: a higher share of immigrants in the population leads to a lower tax rate on labor income, even after controlling for the generosity and size of the welfare state, demographics, and the international exposure of the economy. As predicted by the theory, it is the increased share of low education immigrants that leads to the smaller tax burden.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/471bb6ca9fabda787d58856ce0b0c27e1bec51d8

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Citations in the corpus

Immigration, Ethnic Diversity, and Political Outcomes: Evidence from Denmark (2018, background): “While most of this body of literature focuses on stable differences in ethnic diversity at a point in time, recent evidence also suggests that immigration-driven increases in ethnic diversity might have a negative effect on left-wing political attitudes and related policy outcomes (Razin et al., 200”
The Aging of the Population and the Size of the Welfare State (2002, unknown): “amount of the per-capita transfer, b. Upon inspection of the right-hand side of ( 14 ), we”
Immigration to the Land of Redistribution (2010, unknown): “The implications of self-selection of migrants on opinions about migration (on preferences with respect to migration policies) have been characterised by Razin, Sadka and Swagel (2002) -- drawing on previous work by Metzler and Richard (1981) -- as well as by Hassler et al. (2002).”
Individual Attitudes Towards Immigrants: Welfare-State Determinants Across Countries (2006, unknown): “…skilled as natives (i.e. βU = 1), they represent a net burden for the welfare state and this will require an increase in the tax rate to maintain the demogrant unchanged.20 The following proposition then holds 20A similar ‘fiscal leakage’ effect has been modeled by Razin, Sadka, and Swagel (2002).”
International migration and the role of institutions (2008, background): “…we contribute to the literature that has modeled the political economy of migration policy, following Kimenyi et al. (1986), Benhabib (1996), Razin et al. (2002), and Gradstein and Schiff (2006), since the empirical evidence we present corroborates the relevance of migration policy for the…”
ON THE POLITICAL ECONOMY OF IMMIGRATION AND INCOME REDISTRIBUTION (2004, unknown): “Razin, Sadka and Swagel [ 29 ] study a model in which there is redistribution”
Does Immigration Undermine Public Support for Social Policy? (2014, background): “1999) and immigration (Razin et al. 2002) with smaller governments and less public goods.”
The political economy of international factor mobility (2005, unknown): “also in the model proposed by Razin, Sadka, and Swagel (1998) , in which policies are cho-”
The Economic Consequences of the International Migration of Labor (2008, unknown): “Once they become citizens, immigrants generally obtain the right to vote, altering domestic politics (Razin, Sadka, and Swagel, 2002).”
ETHNIC DIVERSITY, PUBLIC SPENDING, AND INDIVIDUAL SUPPORT FOR THE WELFARE STATE: A REVIEW OF THE EMPIRICAL LITERATURE (2013, unknown): “Razin et al. (2002) incorporate immigration into a framework in which self-interested voters decide on the extent of income redistribution.”
Do Interest Groups Affect U.S. Immigration Policy? (2008, background): “Among the many papers see Mazza and van Winden (1996), Razin, Sadka, and Swagel (2002), Scholten and Thum (1996), Razin and Sadka (1999) and the literature surveyed in the recent volume by Krieger (2005).”