Card, D.

Dustmann, C.

Preston, I.

English

UCL Discovery

Immigration, Culture and EconomyImmigration, Economy and Culture:Analysis of Attitudinal ResponsesDavid CardDepartment of Economics, Berkeley & CReAMChristian DustmannDepartment of Economics, UCL & CReAMIan PrestonDepartment of Economics, UCL & CReAMEASR ConferenceJuly 2005Card, Dustmann and Preston 20051Immigration, Culture and EconomyIntroductionMigration has clear general economic bene¯ts in e±cient international allocation oflabourAlso potential economic bene¯ts to receiving countries if generating ¯scal contributionsNonetheless immigration attracts widespread antipathyAddressing concerns requires understanding of source of hostilityCard, Dustmann and Preston 20052Immigration, Culture and EconomyEconomic self interest: labour market competition IFrom an economic perspective, immigration results in a change of skill mixSuppose many labour types produce few types of outputImmigration increases the share of certain labour types in the workforceProducers will be persuaded to employ these only if their relative wages fall - otherwisethere will be growth in unemploymentRelative earnings of complementary labour types rise and average wages may increaseUnder standard assumptions there is an aggregate `immigration surplus' though un-equally sharedCard, Dustmann and Preston 20053Immigration, Culture and EconomyEconomic self interest: labour market competition IIIf there are many types of traded output then ¯rms will be encouraged to produce moreof those goods using immigrating labour intensivelyThe whole of the impact may be absorbed by changes in the mix of output with nosurplus and no distributional impact on already resident labourEmpirical evidence is not generally supportive of large labour market e®ects (Altonjiand Card 1989; Pischke and Velling 1994; Hunt 1992; Winter-Ebmer and ZweimÄ uller1999; Dustmann, Fabbri and Preston 2005)Fears of such e®ects may still be an important determinant of attitudesCard, Dustmann and Preston 20054Immigration, Culture and EconomyEconomic self interest: labour market competition IIIFearsshouldbegreatestamongthoseeconomicallyactiveandmostsimilartoimmigrantseg those with similar skills, in similar age groups, recent immigrants, ethnic minoritiesRecent economic literature uses variation of attitudes with economic characteristics (esp.labour market status, education) as evidence of economic motivation eg Scheve and Slaugh-ter 2001; Gang, Rivera-Batiz and Yun 2002; Mayda 2002However² such skill gradients are observed not only in countries where immigration is predomi-nantly low skilled (eg US, Germany, Scandinavia) but also where immigrant skills aresimilar to natives (eg UK, Spain)² education is also strongly associated with other dimensions to attitudesCard, Dustmann and Preston 20055Immigration, Culture and EconomyEconomic self interest: welfare burden IImmigrants pay taxes and consume public services and transfersThese e®ects may not balance and public ¯nances may need adjustment (Borjas 1999;Auerbach and Greopoulos 1999)E®ect depends upon² nature of immigration - older, low skilled immigrants pay lower taxes and are morelikely to claim bene¯ts² horizon considered - immigrants may have distinctive age pro¯les to earnings and mayor may not return to country of originNo clear empirical consensus (Borjas 1994; Riphahn 1998; Fertig and Schmidt 2001,Sinn et al 2001; Lee and Miller 2000)Card, Dustmann and Preston 20056Immigration, Culture and EconomyEconomic self interest: welfare burden IIIncidence of implied e®ects depend upon political economy of ¯scal response² If tax rates are altered then e®ects (positive or negative) are felt most strongly by therich (Fetzer 2000)² If public bene¯ts are altered then e®ects (positive or negative) are felt most stronglyby the poorPolitical process is likely to spread impactCard, Dustmann and Preston 20057Immigration, Culture and EconomySocial and cultural self interestThreat may also be perceived to social and cultural prerogatives of current residents(Blumer 1958; Campbell 1965; Blalock 1967; Bobo 1983; Quillian 1995)Group threat may generate prejudice against immigrants which in turn strengthenswithin-group cohesion (Sidanius and Pratto 1999)Negative attitudes to outsiders may sustain social identity in receiving country (Tajfel1982; Tajfel and Turner 1986; Likata and Klein 2002)Card, Dustmann and Preston 20058Immigration, Culture and EconomyTheories not based on self interestInternational altruism can lead respondents to favour immigration if seen as in theinterest of sending countriesSense of international responsibility may be particularly strong where memories of colo-nial history are strongImmigration may be seen as harmful to source countries if robbing them of skilledworkers etcHostility may not be based in consideration of e®ects but arise from displaced aggressionwhich may have roots in economic hardship (Le Vine and Campbell 1972; Green, Glaserand Rich 1998)Card, Dustmann and Preston 20059Immigration, Culture and EconomyEvidence on relative importanceCitrin, Green, Muste and Wong 1995 show for US that conditioning on noneconomicattitudinal responses can weaken evidence of association between hostility and economicchacteristicsDustmann and Preston 2003 use British Social Attitudes Survey data from 1980s toshow² preference for tight immigration policy is much more strongly associated with expres-sions of racial prejudice than job insecurity or tax concerns² labour market association is evident only for highly skilled workersCard, Dustmann and Preston 200510Immigration, Culture and EconomyEuropean Social SurveyImmigration module² distinguishes di®erent sources of immigration{ similar and di®erent ethnicity{ richer or poorer origin country{ European or overseas² asks directly about opinion on perceived impact{ labour market e®ects{ public welfare burden{ cultural e®ectsCard, Dustmann and Preston 200511Immigration, Culture and EconomyExploring data IPartition questions on impact according to relevance to seven dimensions:² labour market competition (wages down; take jobs; hurt poor; ¯ll vacancies)² public welfare burden (take out more; bad for economy)² cultural protectionism (undermine culture; create social tension; worse place to live;common customs better; common language better)² race (mind boss; mind marriage; should be white)² religion (religious variety bad; should be Christian)² crime (worsen crime)² international altruism (helps home country; responsibility to poor; all countries gain)Card, Dustmann and Preston 200512Immigration, Culture and EconomyExploring data IITake mean immigration preference across types (rich European, poor European, richoverseas, poor overseas)Regress on individual characteristics, country dummies and leading principal compo-nentsLatter coe±cients di®er by countryCard, Dustmann and Preston 200513Immigration, Culture and EconomyPrincipal components I−.020.02.04.06.08Culture Labour MarketPublic Burden InternationalismReligion CrimeRaceFigure 1: Factor coe±cientsCard, Dustmann and Preston 200514Immigration, Culture and EconomyPrincipal components II0.02.04.06.08.1Culture Labour MarketPublic Burden InternationalismFigure 2: Factor coe±cientsCard, Dustmann and Preston 200515Immigration, Culture and EconomyPrincipal components: CultureATBECHCZDE DKESFIFRGBGRHUIEITLUNLNOPLPTSESI−1−.50.5Culture score.3 .4 .5 .6 .7Immigration preferenceFigure 3: Factor coe±cientsCard, Dustmann and Preston 200516Immigration, Culture and EconomyPrincipal components: Labour market competitionATBE CHCZDEDKESFIFRGBGRHUIEITLUNLNOPL PTSESI−1−.50.51Labour Market score.3 .4 .5 .6 .7Immigration preferenceFigure 4: Factor coe±cientsCard, Dustmann and Preston 200517Immigration, Culture and EconomyPrincipal components: Welfare burdenATBECHCZDE DKESFIFRGBGRHUIEITLUNLNOPLPTSESI−.50.5Public Burden score.3 .4 .5 .6 .7Immigration preferenceFigure 5: Factor coe±cientsCard, Dustmann and Preston 200518Immigration, Culture and EconomyPrincipal components: InternationalismATBECHCZDEDKESFIFRGBGRHUIEITLUNLNOPLPTSESI−.50.5Internationalism score.3 .4 .5 .6 .7Immigration preferenceFigure 6: Factor coe±cientsCard, Dustmann and Preston 200519Immigration, Culture and EconomyModelLatent attitudes to immigration:y¤ = f ¤ + X A + u;and latent indicator responses:z¤ = f M + X C + w;driven by factor structure:f = X B + v ;where u » N(0;§u), v » N(0;§v), w » N(0;§w) mutually uncorrelated and §w diagonalCard, Dustmann and Preston 200520Immigration, Culture and EconomyReduced formY ¤ ´Ãy¤z¤!= X ¡ + ²;where¡ = BÃ¤M!+ÃAC!´Ã¡1¡2!² = vÃ¤M!+Ãuw!:Card, Dustmann and Preston 200521Immigration, Culture and EconomyReduced formThen ² » N(0;§²), where§² =Ã§u + ¤§v ¤0 M §v ¤0¤§v M0 §w + M §v M0!´Ã§11 §12§012 §22!¡ estimated by independent ordered probits§² estimated element-by-element by bivariate ordered probit given corresponding ele-ments in ¡Computation of variance-covariance matrix follows the standard procedure of expandingthe score vector - see Muth¶ en 1984, Muth¶ en and Satorra 1995Card, Dustmann and Preston 200522Immigration, Culture and EconomyStructural estimationRestrictions imposed by minimum distance§12 = M §v ¤0§22 = §w + M §v M0Diagonal weighting matrix preferred (Altonji and Segal 1996)No use of ¡ or §11 so no need to assume² zeros in A or C² diagonality of §uCard, Dustmann and Preston 200523Immigration, Culture and EconomyFactor identi¯cationIdenti¯cation clearest if M assumed block diagonal:² within block correlation identify elements of M² cross block correlations identify elements of §v² correlations between indicators and immigration responses identify elements of ¤Considerable overidenti¯cation provides degrees of freedom to relax block diagonalityLocal identi¯cation checked by rank conditionCard, Dustmann and Preston 200524Immigration, Culture and EconomyIndicator loadings ITable 1: M matrix: Economic e®ectsVariable Labour Market PublicCompetition BurdenCoe® t-ratio Coe® t-ratioWages down 0.621 110.75Hurt poor 0.696 131.87Fill jobs -0.335 -50.41Take jobs 0.180 15.89 0.498 51.76Take out more 0.665 132.65Bad for economy -0.019 -1.20 0.855 66.32Card, Dustmann and Preston 200525Immigration, Culture and EconomyIndicator loadings IITable 2: M matrix: Other e®ectsVariable Cultural InternationalismProtectionismCoe® t-ratio Coe® t-ratioUndermines culture 0.716 166.95Share customs 0.484 93.86Religious variety -0.411 -77.90Share language 0.210 32.61Social tension 0.660 142.23Worse place to live 0.756 178.66Bad for home country -0.109 -13.49All bene¯t 0.447 63.03Responsibility 0.781 79.44Card, Dustmann and Preston 200526Immigration, Culture and EconomyFactor correlationsTable 3: §v matrix:Variable Labour Market Public Cultural InternationalCompetition Burden Protectionism AltruismCoe® t-ratio Coe® t-ratio Coe® t-ratio Coe® t-ratioLab Market 1.000 0.647 68.42 0.679 113.59 -0.328 -38.64Welfare 0.647 68.42 1.000 0.808 177.29 -0.395 -49.88Culture 0.679 113.59 0.808 177.29 1.000 -0.476 -60.27International -0.328 -38.64 -0.395 -49.88 -0.476 -60.27 1.000Card, Dustmann and Preston 200527Immigration, Culture and EconomyImmigration loadingsTable 4: ¤ matrix: Immigration opinionVariable Labour Market Public Cultural International diag(§u)Competition Burden Protectionism AltruismCoe® t-ratio Coe® t-ratio Coe® t-ratio Coe® t-ratioRich European -0.084 -7.04 -0.034 -2.30 -0.283 -17.14 0.088 10.31 0.822Poor European -0.114 -9.59 0.033 2.12 -0.439 -25.63 0.189 20.89 0.629Rich overseas -0.081 -6.86 0.001 0.10 -0.348 -21.01 0.112 12.99 0.779Poor overseas -0.117 -9.93 0.082 5.32 -0.501 -29.26 0.190 21.19 0.599Card, Dustmann and Preston 200528Immigration, Culture and EconomyIdenti¯cation of BIf C = 0 then B = ¡2M0(MM0)¡1Hence ¯rst stage probit coe±cients from indicator questions can be used to calculatee®ects of characteristics on factorsCard, Dustmann and Preston 200529Immigration, Culture and EconomyFactor regression ITable 5: Factor regression: Economic characteristicsVariable Labour Market Public Cultural InternationalCompetition Burden Protectionism AltruismCoe® t-ratio Coe® t-ratio Coe® t-ratio Coe® t-ratioUnemployed 0.323 9.559 0.246 7.119 0.133 3.924 -0.042 -1.233Inactive 0.181 4.361 0.162 4.120 0.146 3.933 -0.071 -1.794Retired 0.095 6.808 0.041 3.076 0.098 7.244 0.044 3.260Housework 0.033 1.543 0.013 0.622 0.030 1.468 0.007 0.331High School Grad -0.264 -6.848 -0.231 -6.417 -0.306 -8.179 -0.025 -0.659College -0.475 -29.34 -0.403 -25.400 -0.553 -34.025 0.105 6.562Card, Dustmann and Preston 200530Immigration, Culture and EconomyFactor regression IITable 6: Factor regression: Demographic characteristicsVariable Labour Market Public Cultural InternationalCompetition Burden Protectionism AltruismCoe® t-ratio Coe® t-ratio Coe® t-ratio Coe® t-ratioAge 0.571 16.454 0.481 13.85 0.597 17.11 0.286 8.633Age2 -0.286 -7.530 -0.244 -6.479 0.218 5.660 -0.008 -0.224Male 0.032 0.973 -0.115 -3.534 0.060 1.778 -0.096 -3.102Native 0.131 3.092 0.296 7.279 0.205 4.858 -0.093 -2.241Minority -0.133 -3.597 -0.175 -4.767 -0.216 -5.817 0.219 5.843Father Immigrant -0.070 -2.155 -0.153 -4.720 -0.172 -5.047 0.171 5.103Mother Immigrant -0.159 -9.754 -0.194 -12.612 -0.146 -9.104 0.042 2.667Urban -0.036 -1.132 -0.134 -4.184 -0.137 -3.844 0.052 1.650Rural 0.042 1.080 0.069 1.671 0.101 2.203 -0.029 -0.746Card, Dustmann and Preston 200531Immigration, Culture and EconomyConclusionEconomic issues do matter but less than other concerns especially cultural protectionismFurther work:² More attention required to group di®erencesAllow § to di®er by group and impose restrictions allowing M or ¤ to di®erDi®erences across skill groups and across country may be important² Breakdown cultural e®ects furtherCultural homogeneity and cultural harmony may be di®erent dimensions of concernCard, Dustmann and Preston 200532

Immigration, economy and culture: analysis of attitudinal responses

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