Skip to main content

Advertisement

Log in

Does immigration impact institutions?

  • Published:
Public Choice Aims and scope Submit manuscript

Abstract

The economics literature generally finds a positive, but small, gain in income to native-born populations from immigrants and potentially large gains in world incomes. But immigrants can also impact a recipient nation’s institutions. A growing empirical literature supports the importance of strong private property rights, a rule of law, and an environment of economic freedom for promoting long-run prosperity. But little is known about how immigration impacts these institutions. This paper empirically examines how immigration impacts a nation’s policies and institutions. We find no evidence of negative and some evidence of positive impacts in institutional quality as a result of immigration.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

Notes

  1. Comparatively little work has been done on the causes of economic freedom. There is some evidence that economic freedom is enhanced by fiscal decentralization (Cassette and Paty 2010), more educated politicians (Dreher et al. 2009), and by the competitiveness of the political environment (Leonida et al. 2007). Djankov et al. (2003a, b), and Bjornskov (2010) examined the determinants of legal institutions consistent with economic freedom. Finally, La Porta et al. (1999) looked at the determinants of various other aspects of economic freedom, such as marginal tax rates and government fiscal size and scope.

  2. Despite the small net gain, Powell (2012) shows that with substantial transfers the rent-seeking costs to policy changes could be much larger than the standard Harberger triangles.

  3. A separate and distinct question, on which there is a larger amount of research, is what the fiscal impact is of immigration given current tax and spending policies. On this point there is less consensus than on the impact of immigrants on the employment opportunities and wages of natives. The fiscal impact of immigration varies considerably depending on the country studied, the characteristics of the immigrants, and model estimated. In general, though, if a consensus has been reached, it is that the net fiscal impact is small. See Kerr and Kerr (2011) for a survey.

  4. This is consistent with Rodrik (1998), who finds that the more open a country is to international trade, the larger government expenditures are as a percentage of GDP so as to mitigate the population’s risk from fluctuations in the international market.

  5. Dimant et al. (2013) found that immigrants increase corruption in recipient countries when they come from corruption-ridden countries. Our measure of property rights and law is broader than just corruption, but contains some components related to corruption.

References

  • Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity, and poverty. New York: Crown.

    Google Scholar 

  • Alesina, A. F., Baqir, R., & Easterly, W. (1999). Public goods and ethnic divisions. Quarterly Journal of Economics, 114, 1243–1284.

    Article  Google Scholar 

  • Alesina, A. F., & Glaeser, E. L. (2004). Fighting poverty in the US and Europe. New York: Oxford University Press.

    Book  Google Scholar 

  • Banting, K., & Kymlicka, W. (2006). Introduction: Multiculturalism and the welfare state: Setting the context. In K. Banting & W. Kymlicka (Eds.), Multiculturalism and the welfare state (pp. 1–45). New York: Oxford University Press.

    Chapter  Google Scholar 

  • Barro, R. J. (1996). Democracy and growth. Journal of Economic Growth, 1(1), 1–27.

    Article  Google Scholar 

  • Barseghyan, L. (2008). Entry costs and cross-country differences in productivity and output. Journal of Economic Growth, 13(2), 145–167.

    Article  Google Scholar 

  • Bjornskov, C. (2010). How does social trust lead to better governance? An attempt to separate electoral and bureaucratic mechanisms. Public Choice, 144, 323–346.

    Article  Google Scholar 

  • Borjas, G. J. (1999). Immigration and welfare magnets. Journal of Labor Economics, 17, 607–637.

    Article  Google Scholar 

  • Borjas, G. J. (2014). Immigration economics. Cambridge: Harvard University Press.

    Book  Google Scholar 

  • Borjas, G. J. (2015). Immigration and globalization: A review essay. Journal of Economic Literature (forthcoming).

  • Bowles, A., & Gintis, H. (2011). Schooling in capitalist America: Educational reforms and the contradictions of economic life. Chicago: Haymarket Books.

    Google Scholar 

  • Brady, D., & Finnigan, R. (2013). Does immigration undermine public support for social policy? American Sociological Review, 79, 17–42.

    Article  Google Scholar 

  • Burgoon, B., Koster, F., & van Egmond, M. (2012). Support for redistribution and the paradox of immigration. Journal of European Social Policy, 22, 288–304.

    Article  Google Scholar 

  • Butts, F. R. (1978). Public education in the United States: From revolution to reform. Canada: Holt, Rinehart and Winston.

    Google Scholar 

  • Canaan, E., ed. (1904). Editor’s introduction to An inquiry in the nature and causes of the wealth of nations, by Adam Smith. London: Methuen & Co., Ltd. Retrieved August 6, 2014 from http://www.econlib.org/library/Smith/smWN0.html#I.56.

  • Cassette, A., & Paty, S. (2010). Fiscal decentralization and the size of government: A European country empirical analysis. Public Choice, 143, 173–189.

    Article  Google Scholar 

  • Clemens, M. A. (2011). Economics and emigration: Trillion-dollar bills on the sidewalk? Journal of Economics Perspectives, 25, 83–106.

    Article  Google Scholar 

  • Collier, P. (2013). Exodus: How migration is changing our world. Oxford: Oxford University Press.

    Google Scholar 

  • Dawson, J. (2003). Causality in the freedom-growth relationship. European Journal of Political Economy, 19, 479–195.

  • de Haan, J., & Sturm, J. E. (2000). On the relationship between economic freedom and economic growth. European Journal of Political Economy, 16(2), 215–241.

  • de Haan, J., Lundstrom, S., & Sturm, J. E. (2006). Market-oriented institutions and policies and economic growth: A critical survey. Journal of Economic Surveys, 20, 157–191.

    Article  Google Scholar 

  • Dimant, E., Krieger, T. and Redlin, M. (2013). A crook is a crook…but is he still a crook abroad? On the effect of immigration on destination-country corruption. Discussion Paper Series, no. 2013-03. Wilfred-Guth-Stiftungsprofessur fuer Ordnungs- und Wettbewebspolitik, Universitaet Freiburg.

  • Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2003a). Courts. Quarterly Journal of Economics, 118, 453–517.

    Article  Google Scholar 

  • Djankov, A., McLiesh, C., Nenova, T., & Shleifer, Andrei. (2003b). Who owns the media? Journal of Law and Economics, 46, 341–381.

    Article  Google Scholar 

  • Dreher, A., Lamla, M. J., Lein, S. M., & Somogyi, F. (2009). The impact of political leaders’ profession and education on reforms. Journal of Comparative Economics, 37, 169–193.

    Article  Google Scholar 

  • Easterly, W., & Levine, R. (1997). Africa’s growth tragedy: Policies and ethnic divisions. Quarterly Journal of Economics, 112, 1203–1250.

    Article  Google Scholar 

  • Ervasti, H., & Hjerm, M. (2012). Immigration, trust and support for the welfare state. In H. Ervasti, J. G. Andersen, T. Fridberg, & K. Ringdal (Eds.), The future of the welfare state (pp. 153–171). Camberley: Edward Elgar.

    Chapter  Google Scholar 

  • Everheart, R. B. (1977). From universalism to usurpation: An essay on the antecedents to compulsory school attendance legislation. Review of Education Research, 47, 499–530.

    Article  Google Scholar 

  • Finseraas, H. (2008). Immigration and preferences for redistribution: An empirical analysis of European social survey data. Comparative European Politics, 6, 407–431.

    Article  Google Scholar 

  • Freeman, R. (2006). People flows in globalization. Journal of Economic Perspectives, 20, 145–170.

    Article  Google Scholar 

  • Friedberg, R. M., & Hunt, J. (1995). The effects of immigrants on host country wages, employment and growth. Journal of Economic Perspectives, 9, 23–44.

    Article  Google Scholar 

  • Greer, C. (1972). The great school legend: A revisionist interpretation of American public education. New York: Basic Books.

    Google Scholar 

  • Gwartney, J., Holcombe, R., & Lawson, R. (2006). Institutions and the impact of investment on growth. Kyklos, 59, 255–273.

    Article  Google Scholar 

  • Gwartney, J., Lawson, R., & Hall, J. (2013). Economic freedom of the world: 2013 Annual report. Vancouver, BC: Fraser Institute.

    Google Scholar 

  • Hall, J., & Lawson, R. (2013). Economic freedom of the world: An accounting of the literature. Contemporary Economic Policy, 32, 1–19.

    Article  Google Scholar 

  • Justesen, M. K. (2008). The effect of economic freedom on growth revisited: new evidence on causality from a panel of countries 1970–1999. European Journal of Political Economy, 24(3), 642–660.

    Article  Google Scholar 

  • Kerr, S. P. and Kerr, W. R. (2011). Economic impacts of immigration: A survey, NBER Working Paper 16736.

  • Kunovich, R. M. (2004). Social structural position and prejudice: An exploration of cross-national differences in regression slopes. Social Science Research, 33, 20–44.

    Article  Google Scholar 

  • La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1999). The quality of government. Journal of Law Economics and Organization, 15, 222–279.

    Article  Google Scholar 

  • Leeson, P., & Gochenour, Z. (2015). The economic effects of international labor mobility. In B. Powell (Ed.), The economics of immigration: Market-based approaches, social science, and public policy. Oxford: Oxford University Press.

    Google Scholar 

  • Leonida, L., Patti, D. M. A., & Navarra, P. (2007). Towards an equilibrium level of market reform: How politics affects the dynamics of policy change. Applied Economics, 39, 1627–1634.

    Article  Google Scholar 

  • Meissner, D., Kerwin, D. M., Chishti, M., & Bergeron, C. (2013). Immigration enforcement in the United States: The rise of a formidable machinery. Washington DC: Migration Policy Institute.

    Google Scholar 

  • Meyer, J., Tyack, D., Nagel, J., & Gordon, A. (1979). Public education as nation-building in America. American Journal of Sociology, 85, 591–613.

    Article  Google Scholar 

  • Powell, B. (2012). Coyote ugly: The deadweight cost of rent seeking for immigration policy. Public Choice, 150, 195–208.

    Article  Google Scholar 

  • Ralph, J. H., & Rubinson, R. (1980). Immigration and the expansion of schooling in the United States, 1890–1970. American Sociological Review, 45, 943–954.

    Article  Google Scholar 

  • Razin, A., Sadka, E., & Swagel, P. (2002). Tax burden and migration: A political economy theory and evidence. Journal of Public Economics, 85, 167–190.

    Article  Google Scholar 

  • Rodrik, D. (1998). Why do more open economics have bigger governments? Journal of Political Economy, 106, 997–1032.

    Article  Google Scholar 

  • Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: The primacy of institutions over geography and integration in economic development. Journal of Economic Growth, 9, 131–165.

    Article  Google Scholar 

  • Svallfors, S. (1997). Worlds of welfare and attitudes to redistribution: A comparison of eight Western nations. European Sociological Review, 13, 283–304.

    Article  Google Scholar 

  • Williamson, C. (2009). Informal institutions rule: Institutional arrangements and economic performance. Public Choice, 139(3), 371–387.

    Article  Google Scholar 

  • World Bank. (2013). World Development Indicators. Washington DC: World Bank.

    Google Scholar 

Download references

Acknowledgments

We thank the participants at the Association of Private Enterprise Education’s 2014 annual conference, the participants at Texas Tech’s Free Market Institute’s Research Workshop, and an anonymous referee for helpful comments on prior drafts. Support from the John Templeton Foundation is gratefully acknowledged.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Benjamin Powell.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Clark, J.R., Lawson, R., Nowrasteh, A. et al. Does immigration impact institutions?. Public Choice 163, 321–335 (2015). https://doi.org/10.1007/s11127-015-0254-y

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11127-015-0254-y

Keywords

JEL Classification

Navigation