TY  - JOUR
AU  - Razin,Assaf
AU  - Sadka,Effraim
AU  - Swagel,Phillip
TI  - Tax Burden and Migration:  A Political Economy Theory and Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6734
PY  - 1998
Y2  - September 1998
UR  - http://www.nber.org/papers/w6734
L1  - http://www.nber.org/papers/w6734.pdf
N1  - Author contact info:
Assaf Razin
Department of Economics
Cornell University
Uris 422
Ithaca, NY 14853
Tel: 607/255-9625
Fax: 607/255-2818
E-Mail: ar256@cornell.edu

Phillip Swagel
E-Mail: pswagel@umd.edu
AB  - 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.
ER  -