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Ethnic Diversity and Preferences for Redistribution

Author

Listed:
  • Dahlberg, Matz

    (Department of Economics)

  • Edmark, Karin

    (IFN)

  • Lundqvist, Heléne

    (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) effects of ethnic heterogeneity on preferences for redistribution.

Suggested Citation

  • Dahlberg, Matz & Edmark, Karin & Lundqvist, Heléne, 2011. "Ethnic Diversity and Preferences for Redistribution," Working Paper Series 2011:1, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2011_001
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    References listed on IDEAS

    as
    1. Claudia Senik & Holger Stichnoth & Karine Straeten, 2009. "Immigration and Natives’ Attitudes towards the Welfare State: Evidence from the European Social Survey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 91(3), pages 345-370, May.
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    3. Claudia Senik & Holger Stichnoth & Karine van Der Straeten, 2009. "Immigration and natives' attitudes towards redistribution: evidence from the european social survey," PSE-Ecole d'économie de Paris (Postprint) halshs-00754380, HAL.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Income redistribution; ethnic heterogeneity; immigration;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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