Immigration and Voting on the Size and the Composition of Public Spending
Jahrgang 69 (2013) / Heft 2, S. 135-147 (13)
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This paper analyzes the effects of immigration by skill on the outcome of a majority vote among natives on both the size and the composition of public spending. Public spending can be of two types, spending on rival goods (transfers) and on nonrival goods (public goods). I find that the effect of immigration on total public spending depends both on the degree of income inequality and on preferences for the different types of spending. In particular, both skilled and unskilled immigrants are more likely to increase (decrease) the size of total public spending if natives have a preference for spending on public goods (spending on transfers).