Public Finance and Individual Preferences over Globalization Strategies / Gordon H. Hanson, Kenneth F. Scheve, Matthew Slaughter.

Format:

Book

Author/Creator:

Hanson, Gordon H.

Contributor:

National Bureau of Economic Research.

Scheve, Kenneth F.

Slaughter, Matthew.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11028.

NBER working paper series no. w11028

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

In the absence of distortionary tax and spending policies, freer immigration and trade for a country would often be supported by similar groups thanks to similar impacts on labor income. But government policies that redistribute income may alter the distributional politics. In particular, immigrants may pay taxes and receive public services. Imports, obviously, can do neither of these. This suggests quite different political coalitions may organize around trade and immigration. In this paper we develop a framework for examining how pre-tax and post-tax cleavages may differ across globalization strategies and also fiscal jurisdictions. We then apply this framework to the case of individual immigration and trade preferences across U.S. states. We have two main findings. First, high exposure to immigrant fiscal pressures reduces support for freer immigration among natives, especially the more-skilled. Second, there is no public-finance variation in opinion over trade policy, consistent with the data that U.S. trade policy has negligible fiscal-policy impacts. Public-finance concerns appear to be crucial in shaping opinions towards alternative globalization strategies.

Notes:

Print version record

January 2005.