IDEAS home Printed from https://ideas.repec.org/p/ieb/wpaper/doc2011-2.html
   My bibliography  Save this paper

Ethnic Diversity and Preferences for Redistribution

Author

Listed:
  • Matz Dahlberg

    (Uppsala University; IFAU; CESifo; UCFS; UCLS; IEB)

  • Karin Edmark

    (IFN; IFAU; UCFS; UCLS)

  • Heléne Lundqvist

    (Uppsala University; UCFS; UCLS)

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 benet 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

  • Matz Dahlberg & Karin Edmark & Heléne Lundqvist, 2011. "Ethnic Diversity and Preferences for Redistribution," Working Papers 2011/2, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2011-2
    as

    Download full text from publisher

    File URL: https://ieb.ub.edu/wp-content/uploads/2018/04/2011-IEB-WorkingPaper-02.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Erzo F. P. Luttmer, 2001. "Group Loyalty and the Taste for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 500-528, June.
    2. 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.
    3. Per-Anders Edin & Peter Fredriksson & Olof Åslund, 2003. "Ethnic Enclaves and the Economic Success of Immigrants—Evidence from a Natural Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 329-357.
    4. 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.
    5. repec:pse:psecon:2008-43 is not listed on IDEAS
    6. Alberto Alesina & Eliana La Ferrara, 2000. "Participation in Heterogeneous Communities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 847-904.
    7. John E. Roemer & Lee Woojin & Karine van Der Straeten, 2007. "Racism, Xenophobia, and Distribution: Multi-issue Politics in Advanced Democracies," Post-Print halshs-00754747, HAL.
    8. Christer Gerdes, 2011. "The Impact of Immigration on the Size of Government: Empirical Evidence from Danish Municipalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 74-92, March.
    9. Andreoni, James & Payne, A. Abigail & Smith, Justin & Karp, David, 2016. "Diversity and donations: The effect of religious and ethnic diversity on charitable giving," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 47-58.
    10. Jacob L. Vigdor, 2004. "Community Composition and Collective Action: Analyzing Initial Mail Response to the 2000 Census," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 303-312, February.
    11. Dahlberg, Matz & Edmark, Karin, 2008. "Is there a "race-to-the-bottom" in the setting of welfare benefit levels? Evidence from a policy intervention," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1193-1209, June.
    12. Bester, C. Alan & Conley, Timothy G. & Hansen, Christian B., 2011. "Inference with dependent data using cluster covariance estimators," Journal of Econometrics, Elsevier, vol. 165(2), pages 137-151.
    13. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1243-1284.
    14. Woojin Lee & John Roemer & Karine Van der Straeten, 2006. "Racism, Xenophobia, and Redistribution," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 446-454, 04-05.
    15. Shayo, Moses, 2009. "A Model of Social Identity with an Application to Political Economy: Nation, Class, and Redistribution," American Political Science Review, Cambridge University Press, vol. 103(2), pages 147-174, May.
    16. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't the United States Have a European-Style Welfare State?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2), pages 187-278.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dimitrova-Grajzl Valentina & Grajzl Peter & Guse A. Joseph & Smith J. Taylor, 2016. "Racial Group Affinity and Religious Giving: Evidence from Congregation-Level Panel Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 689-725, April.
    2. Jordi Jofre-Monseny (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB)) & Pilar Sorribas-Navarro (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB)) & Javier Vazquez-Gren, 2011. "Welfare spending and ethnic heterogeneity: Evidence from a massive immigration wave," Working Papers in Economics 269, Universitat de Barcelona. Espai de Recerca en Economia.
    3. Stichnoth, Holger & van der Straeten, Karine, 2009. "Ethnic diversity and attitudes towards redistribution: a review of the literature," ZEW Discussion Papers 09-036, ZEW - Leibniz Centre for European Economic Research.
    4. Erik Lindqvist & Robert Östling, 2013. "Identity and redistribution," Public Choice, Springer, vol. 155(3), pages 469-491, June.
    5. Jordi Jofre-Monseny & Pilar Sorribas-Navarro & Javier Vázquez-Grenno, 2016. "Immigration and local spending in social services: evidence from a massive immigration wave," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1004-1029, December.
    6. Fong, Christina M. & Luttmer, Erzo F.P., 2011. "Do fairness and race matter in generosity? Evidence from a nationally representative charity experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 372-394, June.
    7. Coban, Mustafa, 2017. "I'm fine with Immigrants, but ...: Attitudes, ethnic diversity, and redistribution preference," Discussion Paper Series 137, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    8. Nikolaj A. Harmon, 2012. "Immigration, Ethnic Diversity and Political Outcomes: Evidence from Denmark," Working Papers 1383, Princeton University, Department of Economics, Industrial Relations Section..
    9. Klaus Desmet & Ignacio Ortuño-Ortín & Romain Wacziarg, 2009. "The political economy of ethnolinguistic cleavages," Working Papers 2009-17, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    10. Nikolaj A. Harmon, 2010. "The End of the European Welfare States? Migration, Ethnic Diversity and Public Goods," Working Papers 1277, Princeton University, Department of Economics, Industrial Relations Section..
    11. Andrea F.M. Martinangeli & Lisa Windsteiger, 2019. "Immigration vs. Poverty: Causal Impact on Demand for Redistribution in a Survey Experiment," Working Papers tax-mpg-rps-2019-13, Max Planck Institute for Tax Law and Public Finance.
    12. Benjamin Elsner & Jeff Concannon, 2020. "Immigration and Redistribution," Working Papers 202024, School of Economics, University College Dublin.
    13. Lindqvist, Erik & Östling, Robert, 2010. "Political Polarization and the Size of Government," American Political Science Review, Cambridge University Press, vol. 104(3), pages 543-565, August.
    14. Mariko Nakagawa & Yasuhiro Sato & Kazuhiro Yamamoto, 2019. "Segregation and Public Spending under Social Identification," CIRJE F-Series CIRJE-F-1132, CIRJE, Faculty of Economics, University of Tokyo.
    15. Martinangeli, Andrea F.M. & Windsteiger, Lisa, 2023. "Immigration vs. poverty: Causal impact on demand for redistribution in a survey experiment," European Journal of Political Economy, Elsevier, vol. 78(C).
    16. Polipciuc, Maria & Cörvers, Frank & Montizaan, Raymond, 2023. "Peers’ race in adolescence and voting behavior," Economics of Education Review, Elsevier, vol. 97(C).
    17. Riccardo Borgoni & Giacomo Degli Antoni & Marco Faillo & Alessandra Michelangeli, 2017. "Preferences for living in homogenous communities and cooperation: a new methodological approach combining the hedonic price model and a field experiment," Econometica Working Papers wp62, Econometica.
    18. Brunner, Eric J. & Johnson, Erik B., 2016. "Intergenerational conflict and the political economy of higher education funding," Journal of Urban Economics, Elsevier, vol. 91(C), pages 73-87.
    19. Jordi Jofre-Monseny (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB)) & Pilar Sorribas-Navarro (Universitat de Barcelona & Institut dEconomia de Barcelona (IEB)) & Javier Vazquez-Gren, 2011. "Welfare spending and ethnic heterogeneity: Evidence from a massive immigration wave," Working Papers in Economics 269, Universitat de Barcelona. Espai de Recerca en Economia.
    20. Kotera, Go & Mizuno, Nobuhiro & Okada, Keisuke & Samreth, Sovannroeun, 2015. "Ethnic diversity, democracy, and health: Theory and evidence," Research in Economics, Elsevier, vol. 69(3), pages 353-376.

    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
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ieb:wpaper:doc2011-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/iebubes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.