Working Paper Series, Center for Fiscal Studies,
Uppsala University, Department of Economics

Abstract: 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 effects 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) e ects of ethnic heterogeneity on preferences for redistribution.

Keywords: Income redistribution; ethnic heterogeneity; immigration

JEL-codes: D31; D64; Z13

43 pages, January 8, 2011

Full text files

wp20111ucfs.pdf  

Download statistics

• Uppsala University, Department of Economics
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Katarina Grönvall ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:uufswp:2011_001This page generated on 2024-09-13 22:17:28.