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Ethnic Diversity and Preferences for Redistribution

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  • Matz Dahlberg

    ()
    (Uppsala University; IFAU; CESifo; UCFS; UCLS; IEB)

  • Karin Edmark

    ()
    (IFN; IFAU; UCFS; UCLS)

  • Heléne Lundqvist

    ()
    (Uppsala University; UCFS; UCLS)

Abstract

In recent decades, the immigration of workers and refugees to Europe has increased substantially, and the composition of the population in many countries has consequently become much more heterogeneous in terms of ethnic background. If people exhibit in-group bias in the sense of being more altruistic to one's own kind, such increased heterogeneity will lead to reduced support for redistribution among natives. This paper exploits a nationwide program placing refugees in municipalities throughout Sweden during the period 1985{94 to isolate exogenous variation in immigrant shares. We match data on refugee placement to panel survey data on inhabitants of the receiving municipalities to estimate the causal effects of increased immigrant shares on preferences for redistribution. The results show that a larger immigrant population leads to less support for redistribution in the form of preferred social benet levels. This reduction in support is especially pronounced for respondents with high income and wealth. We also establish that OLS estimators that do not properly deal with endogeneity problems|as in earlier studies|are likely to yield positively biased (i.e., less negative) effects of ethnic heterogeneity on preferences for redistribution.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2011/2.

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Length: 40 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:ieb:wpaper:2011/3/doc2011-2

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Keywords: Income redistribution; ethnic heterogeneity; immigration;

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References

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  1. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods And Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(4), pages 1243-1284, November.
  2. Edin, Per-Anders & Fredriksson, Peter & Åslund, Olof, 2000. "Ethnic enclaves and the economic success of immigrants - evidence from a natural experiment," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2000:9, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," Working Papers, Harris School of Public Policy Studies, University of Chicago 9902, Harris School of Public Policy Studies, University of Chicago.
  4. Christer Gerdes, 2011. "The Impact of Immigration on the Size of Government: Empirical Evidence from Danish Municipalities," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 113(1), pages 74-92, 03.
  5. Dahlberg, Matz & Edmark, Karin, 2004. "Is there a "Race-to-the-Bottom" in the Setting of Welfare Benefit Levels? Evidence from a Policy Intervention," Working Paper Series, Uppsala University, Department of Economics 2004:19, Uppsala University, Department of Economics.
  6. Claudia Senik & Holger Stichnoth & Karine Van Der Straeten, 2008. "Immigration and natives' attitudes towards the welfare state: Evidence from the European Social Survey," PSE Working Papers, HAL halshs-00586256, HAL.
  7. Woojin Lee & John Roemer & Karine van der Straeten, 2005. "Racism, xenophobia, and redistribution," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2005-15, University of Massachusetts Amherst, Department of Economics.
  8. repec:pse:psecon:2008-43 is not listed on IDEAS
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  1. The dream of a post-racial America
    by Noah Smith in Noahpinion on 2013-06-29 06:38:00
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  1. Ethnic Diversity and Preferences for Redistribution (JPE 2012) in ReplicationWiki

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