Immigration and Public Spending

René Böheim and Karin Mayr-Dorn

No 1834, IZA Discussion Papers from IZA Network @ LISER

Abstract: We examine the effect of immigration on public spending from a theoretical (political economic) and an empirical perspective. We distinguish between public spending on private goods and on public goods. Our model implies that whether immigration increases or decreases public spending primarily depends on native’s preferences for private versus public good spending. We empirically test our theoretical hypotheses, the 'fiscal effect' and the 'anti-social effect' of immigration using OECD panel data for 1990 – 2001. Estimating a system of simultaneous equations for total public spending and the share of spending on private goods, we find evidence for a negative effect of low-skilled immigration on public spending which is attributable to an anti-social effect. The effect of high-skilled immigration on public spending is positive, as suggested by a fiscal effect.

Keywords: public goods; cash transfers; immigration (search for similar items in EconPapers)
JEL-codes: F2 H4 H5 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-11
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Immigration and public spending (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp1834

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