Immigration, Economy and Culture: Analysis of Attitudinal Responses

1. Immigration, Economy and Culture:Analysis of Attitudinal Responses Prepared for the Conference on Labor and Capital Flows in Europe Following Enlargement, 30-31 January, 2006 – Warsaw, Poland Christian Dustmann (University College London, CEPR, and CReAM)

2. Background • CReAM/UCL: Larger research project which attempts to structure and understand the factors that determine individual attitudes to immigration (in collaboration with David Card and Ian Preston) • Empirical part is based on international attitudinal data, where questionnaire has been designed by us

3. Structure of Research Attitudes to Immigration Cultural Factors Economic Factors Internationalism • Concerns about: • Homogeneity • Social Tension • Cultural Alienation • Crime • Concerns about • Responsibility • Source Country Concern • World Benefit • Concerns about • Public Burden • The Labour Market • Efficiency Is Immigration good or bad for the Economy? Analysis of Attitudinal ResponsesChristian Dustmann and Ian Preston Individual, Context and Country Characteristics

4. Previous Studies Attitudes to Immigration The Labour Market Cultural Factors Economic Factors Internationalism • Concerns about: • Homogeneity • Social Tension • Cultural Alienation • Crime • Concerns about • Responsibility • Source Country Concern • World Benefit • Concerns about • Public Burden • The Labour Market • Efficiency Individual, Context and Country Characteristics

5. The Labour Market • Immigration: may change skill mix • Relative earnings of substitutable labour types decrease • Relative earnings of complementary labour types rise and average wages may increase • Under standard assumptions there is an aggregate immigration surplus but unequally shared • Effects depend on skill mix of immigrants • Many types of traded output: impact may be absorbed by changes in the mix of output

6. Public Burden Concerns • Immigrants pay taxes and consume public services and transfers • These effects may not balance (Borjas 1999; Auerbach and Greopoulos 1999) • Effect depends upon • nature of immigration - older, low skilled immigrants pay lower taxes and are more likely to claim benefits • horizon considered - immigrants may have distinctive earnings age profiles and may or may not return to country of origin • No clear empirical consensus (Borjas 1994; Riphahn 1998; Fertig and Schmidt 2001, Sinn et al 2001; Lee and Miller 2000)

7. Economic Efficiency • Free movement means that labour goes where it is most productive • Standard welfare result – free movement efficient as long as production geographically specific • Filling of skill shortages

8. The Data • European Social Survey (ESS). • First wave conducted in fall 2002. • ESS interviews 1,500 -2,500 people in each of 22 countries, including all (then) EU countries, seven former Eastern European countries and Israel. • Included in the first ESS: topical module on attitudes toward immigrants and minorities. • Module includes over 50 questions.

9. Empirical Analysis Is Immigration good or bad for country’s Economy? Labour Market Competition Public Finance Burden Efficiency • Average Wages • brought down • Immigrants take • jobs away • Immigrants harm • economic prospects • of poor more • than of the rich • Take out more than • put in in taxes • Immigrants take • jobs away • Immigrants harm • economic prospects • of poor more • than of the rich • Help to fill jobs • where shortages • All countries benefit • if movement where • skills needed

10. Descriptive Evidence

11. Descriptive Evidence

12. Immigrants and the Economy

13. Labour Market

14. Public Burden/Distribution

15. Efficiency

16. Model Is Immigration good or bad for country’s Economy? Labour Market Competition Public Finance Burden Efficiency

17. Results

18. Results

19. Conclusions • Concerns regarding effects on the economy: largely represented by overall concerns regarding public burden.