NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Tax Burden and Migration: A Political Economy Theory and Evidence

Assaf Razin, Effraim Sadka, Phillip Swagel

NBER Working Paper No. 6734
Issued in September 1998
NBER Program(s):   PE

The extent of taxation and redistribution policy is generally determined as a political-economy equilibrium by a balance between those who gain from higher taxes/transfers and those who lose. In a stylized model of migration and human capital formation, we show -- somewhat against the conventional wisdom -- that low-skill immigration may lead to a lower tax burden and less redistribution than would be the case with no immigration, even though migrants (naturally) join the pro-tax/transfer coalition. Data on 11 European countries over the period 1974 to 1992 are consistent with the implications of the theory: a higher share of immigrants in the population leads to a lower tax rate on labor income, even after controlling for the generosity and size of the welfare state, demographics, and the international exposure of the economy. As predicted by the theory, it is the increased share of low education immigrants that leads to the smaller tax burden.

download in pdf format
   (863 K)

email paper

This paper is available as PDF (863 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6734

Published: Razin, Assaf, Efraim Sadka and Phillip Swagel. "Tax Burden And Migration: A Political Economy Theory And Evidence," Journal of Public Economics, 2002, v85(2,Aug), 167-190.

Users who downloaded this paper also downloaded these:
Atrostic and Nunns Measuring Tax Burden: A Historical Perspective
Razin and Sadka w5850 Tax Burden and Migration: A Political Economy Perspective
Razin, Sadka, and Swagel w8405 The Aging Population and the Size of the Welfare State
Robinson and Torvik w12133 A Political Economy Theory of the Soft Budget Constraint
Razin, Sadka, and Suwankiri w14784 Migration and the welfare state: Dynamic Political-Economy Theory
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us