DP1877 Determinants of Attitudes Towards Immigration: A Trade-Theoretic Approach

Author(s): Jaime de Melo, Charles Ettinger
Publication Date: May 1998
Keyword(s): direct democracy, Immigration, Trade Theory
JEL(s): D72, F22, J61
Programme Areas: International Trade and Regional Economics, Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1877

This paper uses a three-factor (capital, low- and high-skill labour), two-household (low- and high-skill individuals), two-sector trade model to analyse the determinants of voter attitudes towards immigration under direct democracy and identify factors that would be coherent with both the observed increase in the skilled-unskilled wage differential and the stiffening attitudes towards low-skill capital-poor immigration. If the import-competing sector is intensive in the use of low-skill labour, and capital is the middle factor, an improvement in the terms of trade or neutral technical progress in the exporting sector leads nationals to oppose immigration of capital-poor low-skill households. An increase in income inequality is also likely to stiffen attitudes towards this type of capital-poor, low-skill immigration prevalent in Europe until recently.