The Political Economy of Immigration and Welfare State Effort: Evidence from Europe 23 2.4 Results and Discussion 2.4.1 Welfare State Effort Table 2.4 presents the results of social spending and the generosity index in Column 1 and Column 2, respectively. The estimate in column 1 of Table 2.4 indicates that higher levels of foreign-born are positively and significantly associated with higher levels of social spending, a 1 percentage point increase in foreign-born as a percentage of the population over time is associated with a 0.27 percentage point increase in social welfare spending as a percentage of GDP. The estimate in column 2 of Table 2.4 shows that the relationship between the foreign-born population and the generosity index is not statistically different from zero. The results point to possible expansion of the welfare state in light of increasing migration. With regard to the mechanism, other studies have shown that exposure to globalisation increases individual risk, especially for low-skilled workers’ perceived labour market risks (Walter, 2010, 2017). Moreover, research that has focused on immigration and welfare preferences have shown that if natives feel economically insecure when exposed to increasing movement of labour, particularly at an occupational level, then they support more compensation and greater redistribution from the government (Burgoon et al., 2012; Finseraas, 2008). The results in this article suggest that this may be reflected in voter preferences, and for vote-seeking politicians, voter-demand could outweigh budgetary pressure (stemming from increased global competition) to cut taxes and reduce the supply-side of social welfare. Differing effects between spending and generosity are also found for a number of the control variables. The size of the population over 64 years old has a significant and positive impact on social spending as the number of beneficiaries will be an important predictor of spending, especially considering spending on pensions usually takes up a large proportion of overall public spending. However, there is no statistically significant effect of over 64s on the generosity index, likewise for those under the age of 15 and for the unemployment rate. The results show that, as expected, GDP growth is significant and negatively associated with social spending as in an economic downturn, the denominator (GDP) will grow more slowly than the numerator (social spending), while for the generosity index, there is no statistically significant relationship with GDP growth.
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