When studying the impact of immigration on host countries, it is customary to consider labor-market, scal, and social e¤ects. Here, we will concentrate on labor market e¤ects, emphasizing the channels through which immigration may a¤ect host-countries citizens.
While many di¤erent kind of models try to explain the impact of immigration on natives
labor market conditions, we focus on factor-endowment models which are probably the most suitable to study the political economy of immigration in a direct democracy. Relying on these models, we wish to emphasize the role of economic factors ownership in the determi-nation of migration policies while discussing the political economy of skill requirements, e.g.
under what conditions low-skill immigrants are likely to be accepted under an endogenous immigration policy.
2.2.1 Political economy predictions using factor-endowment models Among the most often cited factor-endowment models connecting natives factor incomes to immigration, we nd the Factor-Proportion analysis and the Heckscher-Ohlin model.
The main prediction of the Factor-Proportion analysis is that any change in a countrys relative factor endowment will have an impact on factor prices, e.g. an inow of unskilled immigrants in a country - by reducing the proportion of skilled versus unskilled workers - will raise (reduce) the wage of skilled (unskilled) citizens. The Heckscher-Ohlin (HO) model - in the standard case where the number of produced goods is at least as large as the number of production factors - predicts that immigration will have no impact on the factors rate of return as long as the country does not modify its output mix.1 However, the larger the immigration ows and the more di¤erent the skills of the immigrants compared to the skills of the natives, the higher the probability that a countrys output mix - and hence the factors rate of return - will change, e.g. a large inow of low-skill immigrants in a
1This e¤ect is sometimes called the factor-price-insensitivity.
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country which is relatively richly endowed with high-skill workers will decrease the relative wage of the low-skill workers.2
In 1996, Benhabib was the rst to introduce explicitly a median-voter approach in factor-endowment models. By supposing that capital - including human capital - is distrib-uted unequally among natives and that a xed pool of potential immigrants with di¤erent capital endowments is wishing to enter a country, he was able to show that if the median natives capital endowment is smaller than some critical level - which is the case when the distribution of capital is su¢ciently skewed to the right -, a minimum skill requirement for immigrants will defeat any other policy under majority voting with pairwise alternatives.
While a useful rst step, Benhabibs model does not allow us to take into account the observation that attitudes toward immigration are shaped not only by households
characteristics but also by sectors of activity. Relying on the Ricardo-Viner model - which seems to be the most adequate to examine the distributional issues raised by immigration in a medium-term time-frame3-, Grether et al. (2001) have argued that, if individual attitudes towards immigration are entirely determined by expected income e¤ects, the acceptable level of immigration will be determined by the interaction of the three following elements: (i) the number of immigrants, (ii) the capital distribution among natives, and (iii) the capital endowment of the immigrants. Probably the main testable implication of this model is that, in the case where capital is evenly distributed within the groups of skilled and unskilled citizens and where the immigration surplus is in nitesimal, skilled natives will always adopt a position which is systematically opposed by unskilled natives. For example, if unskilled citizen are poor and if the median voter is an unskilled citizen, unskilled capital-poor immigration will be opposed in a direct democratic framework.
How does the Ricardo-Viner model help us predict the shaping of immigration policies?
At a country level, according to the characteristics - skill level and capital ownership - of the median voter, we will be able to predict what are the acceptable characteristics for new immigrants to enter the country. At an individual level, this model gives us some interesting insights on who might loose and who might win from immigration according to labor market characteristics.
2.2.2 Who votes?
In a direct democracy in which voting is not compulsory - as in the Swiss case examined here -, one needs rst to analyze the vote-participation process.4 This process can be viewed
2See Scheve and Slaughter (2001) and Mayda (2006) for a more complete summary of the implications of these models for predicting individual preferences towards immigration.
3For instance, Hillman and Weiss (1999) state: Yet, domestic mobile labor (which is of course mobile in the short and the long run) ostensibly bases its trade-policy position on the factor-content propositions of the long-run HO model, and its position on immigration policy on the short-run speci c-factors model.
4Campbell (1999) has shown that [...] the alternative preferred by more expected zealous voters [...]
wins with a high probability [...] even if the expected proportion of the entire electorate that shares that preference is arbitrarily small.
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as a cost-bene t analysis5 where a citizen will only go and vote if the sum of the bene ts of getting his favored alternative accepted is higher than his voting costs.
The costs of voting can be, for instance, the time spent to go to the booths or to get informed about the issues of the vote. Even if we suppose that the average time needed to go to the booths is the same for all citizens, we can expect middle-aged and well-educated individuals, for instance, to be able to acquire information at less costs than the rest of the population. However, since education and age are often positively correlated with income, we can also expect their opportunity cost to get informed and to go to the booths to be much larger.6
The bene ts for a citizen to see his preferred outcome accepted can be viewed from three - not necessarily reinforcing - perspectives. According to an instrumental view, bene ts are simply implied by an expected weighted di¤erence in utility between a citizens preferred alternative and the other. This bene t is high if the result of the vote has a great inuence on the citizens utility and/or if the citizens choice is expected to be pivotal. According to an expressive view, bene ts are associated with the pleasure a citizen gets when sup-porting his preferred alternative and/or simply with the pleasure induced by participating in the vote. The closer (farther) the citizens preferred (non preferred) alternative is to his bliss point, the more he gets satisfaction by supporting his preferred alternative. Finally, according to a signaling view, a citizen can earn bene ts either by abstaining to vote in order to show his discontent or by voting for his preferred alternative even if his vote in not seen as pivotal. According to the instrumental view, abstention is never a way to inuence policy. On the contrary, according to the expressive and signaling views, abstention is placed on the same level as voting yes or no. Therefore, abstention cannot be explained on the basis of a sequential mechanism, where the question to vote or not is answered prior to and independently of the question how to vote.
This observation is an important input for specifying our choice of econometric frame-work as will be seen in section four. Unfortunately, the post-vote data-set we will use does not allow us to disentangle which elements of the cost-bene t analysis mattered most for each citizens participation choice. For instance, in the Ricardo-Viner set-up considered above, a skilled capital-rich citizen might expect his income to signi cantly increase if new unskilled and capital-poor immigrants enter the country. If voting costs are null, accord-ing to the instrumental view, he will vote in favor of more immigration, but accordaccord-ing to the two other views, we cannot say if he will participate or not because of the unobserved characteristics (cultural preferences, discontentment with the government, pleasure with voting, etc.) which may enter his choice.
5For more details see Fauvelle-Aymar et al. (2000) or Kirchgässner and Schulz (2005).
6See Frey (1971) for an early contribution.
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