Ethnic Diversity and Preferences for Redistribution

Arbeitspapier

In recent decades immigration of workers and refugees to Europe has increased substantially, and the composition of the population in many countries has consequently become much more heterogeneous in terms of ethnic background. If people exhibit in-group bias in the sense of being more altruistic to one's own kind, such increased heterogeneity will lead to reduced support for redistribution among natives. This paper exploits a nationwide program placing refugees in municipalities throughout Sweden during the period 1985{94 to isolate exogenous variation in immigrant shares. We match data on refugee placement to panel survey data on inhabitants of the receiving municipalities to estimate the causal effects of increased immigrant shares on preferences for redistribution. The results show that a larger immigrant population leads to less support for redistribution in the form of preferred social benefit levels. This reduction in support is especially pronounced for respondents with high income and wealth. We also establish that OLS estimators that do not properly deal with endogeneity problems|as in earlier studies|are likely to yield positively biased (i.e., less negative) effects of ethnic heterogeneity on preferences for redistribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 860

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Altruism; Philanthropy; Intergenerational Transfers ; Welfare, Well-Being, and Poverty: General ; Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
• Subject: Income redistribution ; Ethnic heterogeneity ; Immigration ; Einkommensumverteilung ; Präferenztheorie ; Ethnische Beziehungen ; Altruismus ; Einwanderung ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dahlberg, Matz ; Edmark, Karin ; Lundqvist, Heléne
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/81335
• Last update: 10.03.2025, 11:41 AM CET