The impact of immigration: looking beyond the labour market

At the fourth event of the series “Policy Implications of Recent Globalization Research” Anna Maria Mayda talked about the fiscal effects of immigration.

In her presentation on 30 June 2021, Anna Maria Mayda (Georgetown University and CEPR) argued that the fiscal effects of immigration are much more significant than the effects on labour markets, but that evidence on fiscal effects is lacking. The main channels by which immigration has fiscal effects is through tax revenues and the provision of public goods. Recent evidence suggests that inflow of immigrants has in fact small and insignificant effects on such channels, while it affects political outcomes, following fears among the population for reduction in tax revenues and public goods. Anna Maria Mayda also pointed to evidence that immigration affects housing prices, but not education expenditure. In all cases, whether the impact of immigration is positive or negative depends on whether it entails the inflow of low-skilled or high-skilled workers. Lastly, Anna Maria Mayda made two additional comments. First, she argued that the welfare state has made it possible for governments to manage public opposition to globalization, but increased immigration may affect the existing safety nets (and in turn opposition to globalization) because of changes in the composition of the population (and thus redistribution of public goods). On the other hand, immigration entails often the inflow of people that are of working age, which may help countries that have seen a recent growth in the old-age dependency rate.

The event series “Policy Implications of Recent Globalization Research” is organised by the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), Brookings, CEP-LSE and CEPR.


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