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On the political economy of immigration and income redistribution

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  • Jim Dolmas
  • Gregory W. Huffman

Abstract

In this paper, we study several general equilibrium models in which the agents in an economy must decide on the appropriate level of immigration into the country. Immigration does not enter directly into the native agents' utility functions, and natives have identical preferences over consumption goods. However, natives may be endowed with different amounts of capital, which alone gives rise to alternative levels of desired immigration, We show that the natives' preferences over desired levels of immigration are influenced by the prospect that new immigrants will be voting in the future, which may lead to higher taxation to finance government spending from which they will benefit. We also show that changes in the degree of international capital mobility, the distribution of initial capital among natives, the wealth or poverty of the immigrant pool, and the future voting rights and entitlements of immigrants can all have a dramatic effect on the equilibrium immigration and taxation policies.

Suggested Citation

  • Jim Dolmas & Gregory W. Huffman, 1998. "On the political economy of immigration and income redistribution," Working Papers 9804, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:98-04
    Note: Published as: Dolmas, Jim and Gregory W. Huffman (2004), "On the Political Economy of Immigration and Income Redistribution," International Economic Review 45 (4): 1129-1168.
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