Immigration, diversity and institutions

Roupakias, Stelios and Dimou, Spiridoula (2020): Immigration, diversity and institutions.

Abstract

This paper examines the relationship between immigration and host countries’ institutional quality, using international migration data, and two composite metrics, encompassing multiple dimensions of governance. Moreover, we construct indicators of cultural diversity, such as fractionalization and polarization, to capture potential effects from multiculturalism. To reduce endogeneity concerns, we employ pseudo gravity-based instruments in a 2SLS setting. Overall, our findings suggest that counties with higher immigrant concentrations and cultural polarization display lower levels of institutional quality. Notably, however, the impact on countries with healthy institutions appear to be negligible.

• Item Type: MPRA Paper
• Language: English
• Keywords: Immigration · Diversity · Institutions
• Subjects: J - Labor and Demographic Economics > J1 - Demographic Economics > J15 - Economics of Minorities, Races, Indigenous Peoples, and Immigrants ; Non-labor Discrimination; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

References

Acemoglu, D., Johnson, S., Robinson, J.A., 2001. The colonial origins of comparative development: an empirical investigation? The American Economic Review 91 (4), 1369–1401.

Ager, P., & Brückner, M. (2013). Cultural diversity and economic growth: Evidence from the US during the age of mass migration. European Economic Review, 64, 76-97.

Akay, A., Constant, A., Giulietti, C., & Guzi, M. (2017). Ethnic diversity and well-being. Journal of Population Economics, 30(1), 265-306.

Alcalá, F., & Ciccone, A. (2004). Trade and productivity. The Quarterly journal of economics, 119(2), 613-646.

Aleksynska, M., & Tritah, A. (2015). The heterogeneity of immigrants, host countries’ income and productivity: A channel accounting approach. Economic Inquiry, 53(1), 150-172.

Alesina, A., & Angeletos, G. M. (2005). Corruption, inequality, and fairness. Journal of Monetary Economics, 52(7), 1227-1244.

Alesina, A., & Giuliano, P. (2015). Culture and institutions. Journal of Economic Literature, 53(4), 898-944.

Alesina, A., Harnoss, J., & Rapoport, H. (2016). Birthplace diversity and economic prosperity. Journal of Economic Growth, 21(2), 101-138.

Alesina, A., & La Ferrara, E. (2002). Who trusts others?. Journal of public economics, 85(2), 207-234.

Alesina, A., Glaeser, E., & Glaeser, E. L. (2004). Fighting poverty in the US and Europe: A world of difference. Oxford University Press.

Alesina, A., Baqir, R., & Easterly, W. (1999). Public goods and ethnic divisions. The Quarterly journal of economics, 114(4), 1243-1284.

Altonji, J. G., & Card, D. (1991). The effects of immigration on the labor market outcomes of less-skilled natives. In Immigration, trade, and the labor market (pp. 201-234). University of Chicago Press.

Anderson, J. E., & Van Wincoop, E. (2003). Gravity with gravitas: A solution to the border puzzle. American economic review, 93(1), 170-192.

Ang, J. B. (2013). Institutions and the long-run impact of early development. Journal of Development Economics, 105, 1-18.

Ang, J. B., Fredriksson, P. G., Nurhakim, A. L. B., & Tay, E. H. (2018). Sunlight, disease, and institutions. Kyklos, 71(3), 374-401.

Aydemir, A., & Borjas, G. J. (2011). Attenuation bias in measuring the wage impact of immigration. Journal of Labor Economics, 29(1), 69-112.

Banerjee, A. V., & Duflo, E. (2019). Good Economics for Hard Times: Better Answers to Our Biggest Problems. Penguin UK.

Barone, G., D'Ignazio, A., de Blasio, G., & Naticchioni, P. (2016). Mr. Rossi, Mr. Hu and politics. The role of immigration in shaping natives' voting behavior. Journal of Public Economics, 136, 1-13.

Bartel, A. P. (1989). Where do the new US immigrants live?. Journal of Labor Economics, 7(4), 371-391.

Barro, R. J., & Lee, J. W. (2013). A new data set of educational attainment in the world, 1950–2010. Journal of development economics, 104, 184-198.

Bertoli, S., & Moraga, J. F. H. (2013). Multilateral resistance to migration. Journal of development economics, 102, 79-100.

Biavaschi, C., Facchini, G., Mayda, A. M., & Mendola, M. (2018). South–South migration and the labor market: evidence from South Africa. Journal of Economic Geography, 18(4), 823-853.

Bjørnskov, C. (2010). How does social trust lead to better governance? An attempt to separate electoral and bureaucratic mechanisms. Public Choice, 144(1-2), 323-346.

Boix, C. (2003). Democracy and redistribution. Cambridge University Press.

Bologna Pavlik, J., Lujan Padilla, E., & Powell, B. (2019). Cultural Baggage: Do Immigrants Import Corruption?. Southern Economic Journal, 85(4), 1243-1261.

Borjas, G. J. (2015). Immigration and globalization: A review essay. Journal of Economic Literature, 53(4), 961-74.

Bove, V., & Elia, L. (2017). Migration, diversity, and economic growth. World Development, 89, 227-239.

Brambor, T., Clark, W. R., & Golder, M. (2006). Understanding interaction models: Improving empirical analyses. Political analysis, 63-82.

Brunner, B., & Kuhn, A. (2018). Immigration, cultural distance and natives' attitudes towards immigrants: Evidence from Swiss voting results. Kyklos, 71(1), 28-58.

Card, D. (2001). Immigrant inflows, native outflows, and the local labor market impacts of higher immigration. Journal of Labor Economics, 19(1), 22-64.

Chang, H. J. (2011). Institutions and economic development: theory, policy and history. Journal of Institutional Economics, 7(4), 473-498.

Clark, G. (2005). The condition of the working class in England, 1209–2004. Journal of Political Economy, 113(6), 1307-1340.

Clark, J. R., Lawson, R., Nowrasteh, A., Powell, B., & Murphy, R. (2015). Does immigration impact institutions?. Public Choice, 163(3-4), 321-335.

Collier, P. (2000). Ethnicity, politics and economic performance. Economics & Politics, 12(3), 225-245.

Collier, P. (2001). Implications of ethnic diversity. Economic policy, 16(32), 128-166.

Collier, P. (2013). Exodus: How migration is changing our world. Oxford University Press.

Costa, D. L., & Kahn, M. E. (2007). Deserters, social norms, and migration. The Journal of Law and Economics, 50(2), 323-353.

D’Amuri, F., & Peri, G. (2014). Immigration, jobs, and employment protection: evidence from Europe before and during the great recession. Journal of the European Economic Association, 12(2), 432-464.

Diamond, J. M. (1998). Guns, germs and steel: a short history of everybody for the last 13,000 years. Random House.

Dimant, E., Krieger, T., & Redlin, M. (2015). A crook is a crook… but is he still a crook abroad? On the effect of immigration on destination‐country corruption. German Economic Review, 16(4), 464-489.

Edo, A., Giesing, Y., Öztunc, J., & Poutvaara, P. (2019). Immigration and electoral support for the far-left and the far-right. European Economic Review, 115, 99-143.

Easterly, W., & Levine, R. (2003). Tropics, germs, and crops: how endowments influence economic development. Journal of monetary economics, 50(1), 3-39.

Felbermayr, G. J., Hiller, S., & Sala, D. (2010). Does immigration boost per capita income?. Economics Letters, 107(2), 177-179.

Frankel, J., & Rose, A. (2002). An estimate of the effect of common currencies on trade and income. The quarterly journal of economics, 117(2), 437-466.

Gebremedhin, T. A., & Mavisakalyan, A. (2013). Immigration and political instability. Kyklos, 66(3), 317-341.

Gerdes, C. (2011). The impact of immigration on the size of government: Empirical evidence from Danish municipalities. Scandinavian Journal of Economics, 113(1), 74-92.

Grogger, J., & Hanson, G. H. (2011). Income maximization and the selection and sorting of international migrants. Journal of Development Economics, 95(1), 42-57.

Hainmueller, J., & Hopkins, D. J. (2014). Public attitudes toward immigration. Annual Review of Political Science, 17, 225-249.

Hall, R. E., & Jones, C. I. (1999). Why do some countries produce so much more output per worker than others?. The quarterly journal of economics, 114(1), 83-116.

Halla, M., Wagner, A. F., & Zweimüller, J. (2017). Immigration and voting for the far right. Journal of the European Economic Association, 15(6), 1341-1385.

Jones, S., & Tarp, F. (2016). Does foreign aid harm political institutions?. Journal of Development Economics, 118, 266-281.

Kaufmann, D., Kraay, A., & Mastruzzi, M. (2011). The worldwide governance indicators: methodology and analytical issues. Hague Journal on the Rule of Law, 3(2), 220-246.

Knack, S., & Keefer, P. (1995). Institutions and economic performance: cross‐country tests using alternative institutional measures. Economics & Politics, 7(3), 207-227.

Kotera, G., Okada, K., & Samreth, S. (2012). Government size, democracy, and corruption: An empirical investigation. Economic Modelling, 29(6), 2340-2348.

La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2008). The economic consequences of legal origins. Journal of economic literature, 46(2), 285-332.

Lipset, S. M. (1959). Political man: The social bases of politics.

Mavisakalyan, A. (2011). Immigration, public education spending, and private schooling. Southern Economic Journal, 78(2), 397-423.

Mayda, A. M. (2010). International migration: A panel data analysis of the determinants of bilateral flows. Journal of Population Economics, 23(4), 1249-1274.

Mayda, A. M., Peri, G., & Steingress, W. (2018). The political impact of immigration: Evidence from the United States (No. w24510). National Bureau of Economic Research.

McCleary, R. M., & Barro, R. J. (2006). Religion and economy. Journal of Economic perspectives, 20(2), 49-72.

Mendez, I., & Cutillas, I. M. (2014). Has immigration affected Spanish presidential elections results?. Journal of Population Economics, 27(1), 135-171.

Montalvo, J. G., & Reynal-Querol, M. (2005a). Ethnic polarization, potential conflict, and civil wars. American economic review, 95(3), 796-816.

Montalvo, J. G., & Reynal-Querol, M. (2005b). Ethnic polarization, potential conflict, and civil wars. American economic review, 95(3), 796-816.

Montalvo, J. G., & Reynal-Querol, M. (2020). Ethnic diversity and growth: Revisiting the evidence. Forthcoming in Review of Economics and Statistics

North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge university press.

Nunn, N., & Puga, D. (2012). Ruggedness: The blessing of bad geography in Africa. Review of Economics and Statistics, 94(1), 20-36.

Olson, M. (1982). The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. Yale University Press.

Orefice, G., & Santoni, G. (2018). Exporting creative and cultural products: Birthplace diversity matters!. The World Economy, 41(7), 1867-1887.

Ortega, F., & Peri, G. (2014). Openness and income: The roles of trade and migration. Journal of international Economics, 92(2), 231-251.

Padilla, A., & Cachanosky, N. (2018). The Grecian horse: does immigration lead to the deterioration of American institutions?. Public Choice, 174(3-4), 351-405.

Powell, B., Clark, J. R., & Nowrasteh, A. (2017). Does mass immigration destroy institutions? 1990s Israel as a natural experiment. Journal of Economic Behavior & Organization, 141, 83-95.

Putnam, R. D. (2007). E pluribus unum: Diversity and community in the twenty‐first century the 2006 Johan Skytte Prize Lecture. Scandinavian political studies, 30(2), 137-174.

Putterman, L., & Weil, D. N. (2010). Post-1500 population flows and the long-run determinants of economic growth and inequality. The Quarterly journal of economics, 125(4), 1627-1682.

Razin, A., Sadka, E., & Swagel, P. (2002). Tax burden and migration: a political economy theory and evidence. Journal of Public Economics, 85(2), 167-190.

Rodrik, D. (2004). Institutions and economic performance-getting institutions right. CESIfo DICE report, 2(2), 10-15.

Roupakias, S., & Chletsos, M. (2020). Immigration and far-right voting: evidence from Greece. The Annals of Regional Science, 1-27.

Rubin, J. (2017). Rulers, Religion, and Riches: Why the West got rich and the Middle East did not. Cambridge University Press.

Sides, J., & Citrin, J. (2007). European opinion about immigration: The role of identities, interests and information. British journal of political science, 477-504.

Silva, J. S., & Tenreyro, S. (2006). The log of gravity. The Review of Economics and statistics, 88(4), 641-658.

Vahabi, M. (2018). The resource curse literature as seen through the appropriability lens: a critical survey. Public Choice, 175(3-4), 393-428.

Wood, R. M., & Gibney, M. (2010). The Political Terror Scale (PTS): A re-introduction and a comparison to CIRI. Hum. Rts. Q., 32, 367.