Immigration, welfare generosity and electoral preferences: an empirical study of Yugoslavian immigrants in Norway

Abstract

Does immigration reduce natives’ support for the welfare state? Immigration is a growing source of ethnic heterogeneity, which is said to change individual attitudes towards redistributive public spending. This paper exploits municipallevel variations in Yugoslavian immigrants to estimate the causal effects on welfare generosity and electoral preferences in Norway (1990-2003). The analysis is performed by using fixed effect regression models on a balanced panel data of 394 municipalities. The results indicate that a higher share of Yugoslavians in Norway is associated with higher welfare generosity and lower vote share for left-wing parties. In contrast to previous studies, there is little indication of a cost constraint from higher welfare use or a negative shift in native’s preference for redistribution from a higher share of Yugoslavians. The observed positive effect on welfare generosity does not seem to be driven by the political arena as support for left-wing parties and more redistribution is estimated to reduce, but rather from higher welfare spending in municipalities where welfare needs are high. Ultimately, the study give insight on how relatively high-skilled immigrants affect welfare support through redistributive spending and voting attitudes.