Compensation or Retrenchment?—The Paradox of
Immigration and Public Welfare Spending in U.S. States
Ping Xu
University of Rhode Island
Email: [email protected]
Ping Xu University of Rhode Island 2015 SIRC @ Shanghai
Outline
• Research Question
• Previous Literature
• Theory and Hypotheses
• Data and Methods
• Findings and Implications
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Research Question
• How has immigration influenced public welfare spending in the US?
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Previous literature
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Globalization compensation theory
Race/Ethnicity theory
Ping Xu University of Rhode Island 2015 SIRC @ Shanghai
Globalization compensation theory
• Globalization increased competition in labor market increased economic insecurity and risks vulnerable individuals demand more welfare spending (Stolper and Samuelson 1941; Cameron 1978; Garrett 1995; 1998).
• Immigrants job loss and reduced wages and salary for low-skill workers more welfare spending (Borjas 1994; 2004; Topel 1994)
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Race/Ethnicity theory
• Racial/ethnic diversity reduced solidarity due to out-group prejudice lower welfare support less generous welfare state (Gilens 1996; 1999; Alesina and Glaeser 2004; Bay and Pedersen 2006, etc.)
• Immigrants-led diversity lower welfare support less welfare spending (Eger 2010; Mau and Burkhardt 2012)
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Two Competing theories
Immigration Welfare Spending
•Compensation theory: +
•
Race/ethnicity theory: -
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Conditions for two theories
• Compensation theory: Unemployment
• Race/ethnicity theory: Welfare inclusion of immigrants
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When does which theory work?
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+
-Null
Null
Theory
{
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Immigration The American Welfare State
State context Labor market conditionImmigrant welfare policy
Ping Xu University of Rhode Island 2015 SIRC @ Shanghai
Data and methods (I)
• Methods– CSTS: American states 1996-2009
– Error Correction Models (ECMs) with Panel Corrected Standard Errors (PCSEs)
• Dependent variable– Public welfare spending as a % of gross state products
• Independent variables– % foreign-born population
– State unemployment rate
– State immigrant welfare inclusiveness
– Two-way and three-way interactions
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Data and methods (II)
• Controls– Political controls
• State government ideology
• Mass liberalism
• Union density
– Socioeconomic controls• % Black
• Female labor force participation
• Per capita growth
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Three-way Interaction Model
Ping Xu University of Rhode Island 2015 SIRC @ Shanghai
Interactive effect
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+
-Null
Null
Implications
•Immigration does influence the American welfare state.
•Applicability of “compensation” or “race/ethnicity” theory depends on state context (labor market, policy environment).
•The public is fairly rational (Page and Shapiro 1992).
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Questions?
Comments!
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