Immigration and voting on the size and the composition of public spending
This paper develops a model to analyze the effects of immigration by skill on the outcome of a majority vote among natives on both the size as well as the composition of public spending. Public spending can be of two types, spending on rival goods (transfers) and on non-rival goods (public goods). I find that relative preferences for the different types of public spending are crucial for the effects of immigration. In particular, immigrants of either skill can increase (decrease) the size of total public spending, if natives have a relative preference for spendingon public goods (spending on transfers). I provide some illustration of potential relative spending preferences in OECD countries using panel data for 1980 - 2010.
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