Working Paper: CEPR ID: DP1877
Authors: Sanoussi Bilal; Jean-Marie Grether; Jaime de Melo
Abstract: This paper uses a three-factor (capital, low- and high-skill labour), two-household (low- and high-skill individuals), two-sector trade model to analyse the determinants of voter attitudes towards immigration under direct democracy and identify factors that would be coherent with both the observed increase in the skilled-unskilled wage differential and the stiffening attitudes towards low-skill capital-poor immigration. If the import-competing sector is intensive in the use of low-skill labour, and capital is the middle factor, an improvement in the terms of trade or neutral technical progress in the exporting sector leads nationals to oppose immigration of capital-poor low-skill households. An increase in income inequality is also likely to stiffen attitudes towards this type of capital-poor, low-skill immigration prevalent in Europe until recently.
Keywords: immigration; direct democracy; trade theory
JEL Codes: D72; F22; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| terms of trade (F14) | opposition to immigration of capital-poor, low-skill households (F22) |
| income inequality (D31) | stiffened attitudes towards low-skill immigration (K37) |
| skewed distribution of capital ownership (D33) | increased opposition to low-skill immigration (K37) |