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On the political economy of immigration and income redistribution

  • Dolmas, James

    ()

    (Federal Reserve Bank of Dallas)

  • Huffman, Gregory W.

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.

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File URL: http://dallasfed.org/assets/documents/research/papers/1998/wp9804.pdf
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Paper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 9804.

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Length: 39 pages
Date of creation: 1998
Date of revision:
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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  1. George J. Borjas, 1994. "The Economic Benefits from Immigration," NBER Working Papers 4955, National Bureau of Economic Research, Inc.
  2. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1991. "International real business cycles," Staff Report 146, Federal Reserve Bank of Minneapolis.
  3. Enrique G. Mendoza & Linda L. Tesar, 1995. "Supply-Side Economics in a Global Economy," NBER Working Papers 5086, National Bureau of Economic Research, Inc.
  4. Wellisch, Dietmar & Wildasin, David E., 1996. "Decentralized income redistribution and immigration," European Economic Review, Elsevier, vol. 40(1), pages 187-217, January.
  5. N/A, 1996. "Note:," Foreign Trade Review, Indian Institute of Foreign Trade, vol. 31(1-2), pages 1-1, January.
  6. Topel, Robert H, 1994. "Regional Labor Markets and the Determinants of Wage Inequality," American Economic Review, American Economic Association, vol. 84(2), pages 17-22, May.
  7. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, March.
  8. Kenneth F. Scheve & Matthew J. Slaughter, 2001. "Labor Market Competition And Individual Preferences Over Immigration Policy," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 133-145, February.
  9. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 1996. "Searching for the Effect of Immigration on the Labor Market," NBER Working Papers 5454, National Bureau of Economic Research, Inc.
  10. Dolmas, Jim & Huffman, Gregory W., 1997. "The political economy of endogenous taxation and redistribution," Economics Letters, Elsevier, vol. 56(2), pages 223-227, October.
  11. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  12. Baxter, Marianne & Crucini, Mario J, 1993. "Explaining Saving-Investment Correlations," American Economic Review, American Economic Association, vol. 83(3), pages 416-36, June.
  13. Storesletten, Kjetil, 1998. "Sustaining Fiscal Policy Through Immigration," Seminar Papers 664, Stockholm University, Institute for International Economic Studies.
  14. David Card, 1989. "The Impact of the Mariel Boatlift on the Miami Labor Market," NBER Working Papers 3069, National Bureau of Economic Research, Inc.
  15. Razin, A. & Sadka, E. & Swagel, P., 1998. "Tax Burden and Migration: a Political Economy Theory and Evidence," Papers 15-98, Tel Aviv.
  16. Claudia Goldin, 1993. "The Political Economy of Immigration Restriction in the United States, 1890 to 1921," NBER Working Papers 4345, National Bureau of Economic Research, Inc.
  17. David Backus & Patrick J. Kehoe & Finn E. Kydland, 1992. "Dynamics of the Trade Balance and the Terms of Trade: The S-Curve," NBER Working Papers 4242, National Bureau of Economic Research, Inc.
  18. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  19. George J. Borjas, 1994. "The Economics of Immigration," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1667-1717, December.
  20. Mendoza, Enrique G, 1991. "Real Business Cycles in a Small Open Economy," American Economic Review, American Economic Association, vol. 81(4), pages 797-818, September.
  21. James Dolmas & Gregory W. Huffman, 1997. "On the political economy of immigration," Working Papers 9706, Federal Reserve Bank of Dallas.
  22. Borjas, George J. & Freeman, Richard B. (ed.), 1992. "Immigration and the Work Force," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226066332, March.
  23. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
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