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The Political Economy of Xenophobia and Distribution: The Case of Denmark

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  • John E. Roemer
  • Karine Van der Straeten

Abstract

For the first time in some years, a conservative government came to power in Denmark in 2001, due primarily to the citizenry's disaffection with social‐democratic policies on immigration. We represent political competition in Denmark as taking place over two issues—the size of the public sector and immigration—and model political equilibrium using the party unanimity Nash equilibrium (PUNE) concept, which generates equilibria on multi‐dimensional policy spaces where parties form endogenously. By fitting the model to Danish data, we argue that citizen xenophobia may be expected to decrease the size of the Danish public sector by an amount between 12% and 36% of one standard deviation of the probability distribution of citizens' ideal points of the size of the public sector.

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  • John E. Roemer & Karine Van der Straeten, 2006. "The Political Economy of Xenophobia and Distribution: The Case of Denmark," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 251-277, July.
    • Handle: RePEc:bla:scandj:v:108:y:2006:i:2:p:251-277
    DOI: 10.1111/j.1467-9442.2006.00450.x
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    as
    1. John E. Roemer & Karine Van der Straeten, 2006. "The Political Economy of Xenophobia and Distribution: The Case of Denmark," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 251-277, July.
    2. David Austen-Smith & Michael Wallerstein, 2003. "Redistribution in a Divided Society," Discussion Papers 1362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Francesc Ortega, 2004. "Immigration and the survival of the welfare state," Economics Working Papers 815, Department of Economics and Business, Universitat Pompeu Fabra.
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