14 Chapter 2 Razin et al. (2002) also use political economy theory to show how immigration can lead to preferences for lower taxes and less redistribution. They argue that as the foreign-born population increases, a larger proportion of tax revenues go to low-skilled migrants, thus redistribution becomes costlier for the native-born population. As a result, this ‘fiscal leakage’ from native to immigrant population leads to a shift in attitudes where the median voter will now support lower taxes. However, this relies on the assumption that immigrants are a net drain on public expenditures, of which the evidence is mixed (Boeri, 2010). Following the same logic means that if immigrants are net contributors, then the median voter would shift in favour of increasing welfare state effort (Gaston & Rajaguru, 2013). In 1982, Ruggie presented an alternative explanation regarding increasing openness and welfare state effort. He proposed that in order to maintain an open international economic order, then governments would have to deliver a level of social protection that safeguards citizens from the risks brought by internationalisation (Ruggie, 1982). While Ruggie’s theory of ‘Embedded Liberalism’ was intended for the globalisation of trade and capital, it is generalisable to the globalisation of labour. If immigration is perceived as an economic risk by natives and those who benefit from open borders wish to maintain support for immigration, then the same deal meant for trade and capital could be struck for immigration. Similarly, the compensation hypothesis argues that in light of increasing economic insecurity, natives will demand greater compensation and these policy preferences will shape the response from political elites (Walter, 2010, 2017). There is considerable research supporting the idea that an individual’s economic situation strongly affects their policy preferences (Hays, Ehrlich, & Peinhardt, 2005), providing the theoretical micro-foundations for the expansion of the welfare state in light of increasing immigration. 2.2.2 The empirical relationship between immigration and the welfare state Despite the importance of the subject, remarkably few studies have empirically examined immigration and its role in shaping contemporary welfare state effort. There is, however, significant research on immigration and welfare preferences1 that may provide an indication regarding what to expect for welfare effort in Europe. In a study comparing 21 European countries, Finseraas (2008) finds evidence to support opposing effects of immigration on welfare attitudes depending on the risk perceived from immigration. The results presented show that those who are opposed to equal rights for immigrants are less likely to support redistribution, whereas those who believe that immigration reduces average wages or immigrants take jobs away are more likely to support redistribution. Moreover, through analys1 See Stichnoth and Van der Straeten (2013) for a review of the empirical literature
RkJQdWJsaXNoZXIy MjY0ODMw