Seminar “Immigration and Redistribution: Evidence from 8 Million Forced Migrants”

Time:                   13:00-14:00 Hrs

Venue:                 CPB-Office, Bezuidenhoutseweg 30, Den Haag, room 3, Braamzaal

Presentation:  Nico Pestel (IZA)

Discussant:       Ernest Berkhout

Language:         English

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Abstract:

This paper shows that immigration can have a profound and persistent impact on redistribution. We illustrate this based on the sudden arrival of 8 million forced migrants in West Germany in the aftermath of World War II. These migrants, after having lost all their assets, were much poorer than the population in West Germany, but had full voting rights from the time of arrival. Based on panel data for 400 West German cities, we show that cities responded to this inflow by raising business taxes and taxes on farmland, while leaving property and wage bill taxes unchanged. Further analysis suggests that these results can be explained by changes in local voting patterns. We further document a long-lasting impact of this mass immigration on people's preferences for redistribution today. People living today in places with high inflows in the 1940s display markedly stronger preferences for a large government.

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