English title: Trading Off Welfare and Immigration in Europe

Author(s): Ole-Petter Moe Hansen - Stefan Legge -

Language: English

Type: Report, working paper

Year: 2015

Abstract

In this paper, we explore the trade-off Europe faces when choosing between immigration from poor countries and welfare spending. Using data from the European Social Survey on sixteen countries from 2002 - 2012, we document that voter preferences shifted in favor of redistribution but polarized over low-skill immigration. Notably, there is a sharp increase in the share of individuals supporting the welfare state but heavily opposing immigration. In order to provide an economic explanation for these phenomena, we present a model where support for both immigration and redistributive policies are potentially motivated by altruism. Using this model, we show how rising unemployment rates, shares of foreign-born citizens and aggregate education can explain observed shifts in policy preferences.

Edition: 0

Institution: Norwegian School of Economics (NHH), Department of Economics

Number of pages: 66

Number: 22

Series: NHH Dept. of Economics Discussion Paper