Ethnic Diversity and Preferences for Redistribution
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 e ects 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 benefit 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.
|Date of creation:||03 Jan 2011|
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- Woojin Lee & John E. Roemer & Karine Van Der Straeten, 2006.
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- 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
2004:19, Uppsala University, Department of Economics.
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"Ethnic enclaves and the economic success of immigrants - evidence from a natural experiment,"
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- 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
- Claudia Senik & Holger Stichnoth & Karine Straeten, 2009. "Immigration and Natives’ Attitudes towards the Welfare State: Evidence from the European Social Survey," Social Indicators Research, Springer, vol. 91(3), pages 345-370, May.
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