The economics literature generally finds a positive, but small, gain in income to native-born pop... more The economics literature generally finds a positive, but small, gain in income to native-born populations from immigrants and potentially large gains in world incomes. But immigrants can also impact a recipient nation’s institutions. A growing empirical literature supports the importance of strong private property rights, a rule of law, and an environment of economic freedom for promoting long run prosperity. Although the literature on the impact of economic freedom on various social and economic outcomes is quite large, comparatively little work has tried to explain economic freedom as a dependent variable. This paper empirically examines how immigration impacts a region’s policies and institutions. We find small but positive increases in institutional quality as a result of immigration.
The fiscal impact of immigration — how immigrants and their descendants affect government budgets... more The fiscal impact of immigration — how immigrants and their descendants affect government budgets — is a widely debated and contentious issue. Economists overwhelmingly accept the economic gains of immigration, but are less certain about immigrants’ impact on government budgets. Contention over this issue is fueled by the numerous methodologies and complexity of analysis that obscure the fiscal costs of immigration.
The complexities are many. Each layer of the United States’ federal structure of government — federal, state, and local — is funded by different types of taxes and each spend their budgets on different programs and in different ways. Many government spending programs are only directed at certain age groups. Public education is one example of a front-loaded cost expended on children and young adults at the beginning of their lifespan, while Medicare and Social Security are back-loaded costs expended closer to the end of the recipient’s life span. The inter temporal structure of many government programs makes age a relevant factor in analyzing the fiscal costs of immigration, but so do other factors such as the skill level, fertility, and language ability of the immigrants themselves. This is not much different from the fiscal impact of newborn children, who consume vast amounts of public schooling before paying taxes. The working life of an immigrant, however, can be shorter than that of a native, because immigrants often immigrate later in life, after their window for taking advantage of government-funded education expires (Rowthorn 2008: 563-564).
The types of public goods consumed by immigrants also affect their fiscal impact. If the public goods are “pure,” meaning that they are non-rivalrous and non-excludable, then more taxpayers in the form of immigrants spread out the tax cost without diminishing the quality of the goods. Immigrants lower the tax burden of providing pure public goods. But, if the public goods are “congestible,” more immigrants could decrease the quality of the goods, prompting the government to spend more tax dollars to maintain the quality. Some congestion occurs for most government-supplied goods whenever population increases, by immigration or through procreation, but the fiscal impact varies widely.
In a standard median voter model, low-income immigration increases the size of the welfare state.... more In a standard median voter model, low-income immigration increases the size of the welfare state. Other research suggests evidence for a group-interested voter model, which predicts that welfare will shrink with an increase in low-income immigration. We contend that neither model accurately describes political reality after testing these theories with United States data from 1970 to 2010. We use a variety of measures for welfare and related public spending such as K-12 education, Medicaid, and unemployment insurance. Contrary to expectations from previous work focused on Europe, we find that the amount of immigrant-driven ethnic and racial diversity does not have a significant effect on these spending areas, whether considered in total expenditure or per capita. This could be due to countervailing pressures from these two models of voter motivation or due to factors unrelated to immigration, such as differences in institutions.
Government employment of private military firms is not a new phenomenon. During the Age
of Sail, ... more Government employment of private military firms is not a new phenomenon. During the Age of Sail, naval powers issued privateering licenses to shipowners, allowing and encouraging them to raid enemy commerce and attack foreign navies during times of war – a system that bears several similarities to modern military contracting. But private enterprise did not go to war in a legal vacuum. How do countries make the incentives for private security firms align with national policy in the 21st century?
This paper argues that when contracts between enemies are enforceable and transaction costs are l... more This paper argues that when contracts between enemies are enforceable and transaction costs are low, plunderers and their victims benefit from trade that facilitates the former's ability to plunder the latter. Coasean “plunder contracts” transform part of plunder's social costs into private benefits for plunderers and their victims. A significant portion of the wealth that plunder would otherwise destroy is preserved instead. The result is more efficient plunder. To investigate our hypothesis we consider maritime marauding in the 18th and 19th centuries. Privateers developed a system of ransom and parole founded on Coasean plunder contracts with victim merchantmen.► Plunderers and their victims have incentives to forge Coasean contracts that reduce plunder's social costs. ► Privateering plunder was partly conducted on the basis of Coasean contracts in the 18th and 19th centuries. ► Coasean plunder contracts created more efficient plunder in 18th- and 19th-century privateering.
The economics literature generally finds a positive, but small, gain in income to native-born pop... more The economics literature generally finds a positive, but small, gain in income to native-born populations from immigrants and potentially large gains in world incomes. But immigrants can also impact a recipient nation’s institutions. A growing empirical literature supports the importance of strong private property rights, a rule of law, and an environment of economic freedom for promoting long run prosperity. Although the literature on the impact of economic freedom on various social and economic outcomes is quite large, comparatively little work has tried to explain economic freedom as a dependent variable. This paper empirically examines how immigration impacts a region’s policies and institutions. We find small but positive increases in institutional quality as a result of immigration.
The fiscal impact of immigration — how immigrants and their descendants affect government budgets... more The fiscal impact of immigration — how immigrants and their descendants affect government budgets — is a widely debated and contentious issue. Economists overwhelmingly accept the economic gains of immigration, but are less certain about immigrants’ impact on government budgets. Contention over this issue is fueled by the numerous methodologies and complexity of analysis that obscure the fiscal costs of immigration.
The complexities are many. Each layer of the United States’ federal structure of government — federal, state, and local — is funded by different types of taxes and each spend their budgets on different programs and in different ways. Many government spending programs are only directed at certain age groups. Public education is one example of a front-loaded cost expended on children and young adults at the beginning of their lifespan, while Medicare and Social Security are back-loaded costs expended closer to the end of the recipient’s life span. The inter temporal structure of many government programs makes age a relevant factor in analyzing the fiscal costs of immigration, but so do other factors such as the skill level, fertility, and language ability of the immigrants themselves. This is not much different from the fiscal impact of newborn children, who consume vast amounts of public schooling before paying taxes. The working life of an immigrant, however, can be shorter than that of a native, because immigrants often immigrate later in life, after their window for taking advantage of government-funded education expires (Rowthorn 2008: 563-564).
The types of public goods consumed by immigrants also affect their fiscal impact. If the public goods are “pure,” meaning that they are non-rivalrous and non-excludable, then more taxpayers in the form of immigrants spread out the tax cost without diminishing the quality of the goods. Immigrants lower the tax burden of providing pure public goods. But, if the public goods are “congestible,” more immigrants could decrease the quality of the goods, prompting the government to spend more tax dollars to maintain the quality. Some congestion occurs for most government-supplied goods whenever population increases, by immigration or through procreation, but the fiscal impact varies widely.
In a standard median voter model, low-income immigration increases the size of the welfare state.... more In a standard median voter model, low-income immigration increases the size of the welfare state. Other research suggests evidence for a group-interested voter model, which predicts that welfare will shrink with an increase in low-income immigration. We contend that neither model accurately describes political reality after testing these theories with United States data from 1970 to 2010. We use a variety of measures for welfare and related public spending such as K-12 education, Medicaid, and unemployment insurance. Contrary to expectations from previous work focused on Europe, we find that the amount of immigrant-driven ethnic and racial diversity does not have a significant effect on these spending areas, whether considered in total expenditure or per capita. This could be due to countervailing pressures from these two models of voter motivation or due to factors unrelated to immigration, such as differences in institutions.
Government employment of private military firms is not a new phenomenon. During the Age
of Sail, ... more Government employment of private military firms is not a new phenomenon. During the Age of Sail, naval powers issued privateering licenses to shipowners, allowing and encouraging them to raid enemy commerce and attack foreign navies during times of war – a system that bears several similarities to modern military contracting. But private enterprise did not go to war in a legal vacuum. How do countries make the incentives for private security firms align with national policy in the 21st century?
This paper argues that when contracts between enemies are enforceable and transaction costs are l... more This paper argues that when contracts between enemies are enforceable and transaction costs are low, plunderers and their victims benefit from trade that facilitates the former's ability to plunder the latter. Coasean “plunder contracts” transform part of plunder's social costs into private benefits for plunderers and their victims. A significant portion of the wealth that plunder would otherwise destroy is preserved instead. The result is more efficient plunder. To investigate our hypothesis we consider maritime marauding in the 18th and 19th centuries. Privateers developed a system of ransom and parole founded on Coasean plunder contracts with victim merchantmen.► Plunderers and their victims have incentives to forge Coasean contracts that reduce plunder's social costs. ► Privateering plunder was partly conducted on the basis of Coasean contracts in the 18th and 19th centuries. ► Coasean plunder contracts created more efficient plunder in 18th- and 19th-century privateering.
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Papers by Alex Nowrasteh
The complexities are many. Each layer of the United States’ federal structure of government — federal, state, and local — is funded by different types of taxes and each spend their budgets on different programs and in different ways. Many government spending programs are only directed at certain age groups. Public education is one example of a front-loaded cost expended on children and young adults at the beginning of their lifespan, while Medicare and Social Security are back-loaded costs expended closer to the end of the recipient’s life span. The inter temporal structure of many government programs makes age a relevant factor in analyzing the fiscal costs of immigration, but so do other factors such as the skill level, fertility, and language ability of the immigrants themselves. This is not much different from the fiscal impact of newborn children, who consume vast amounts of public schooling before paying taxes. The working life of an immigrant, however, can be shorter than that of a native, because immigrants often immigrate later in life, after their window for taking advantage of government-funded education expires (Rowthorn 2008: 563-564).
The types of public goods consumed by immigrants also affect their fiscal impact. If the public goods are “pure,” meaning that they are non-rivalrous and non-excludable, then more taxpayers in the form of immigrants spread out the tax cost without diminishing the quality of the goods. Immigrants lower the tax burden of providing pure public goods. But, if the public goods are “congestible,” more immigrants could decrease the quality of the goods, prompting the government to spend more tax dollars to maintain the quality. Some congestion occurs for most government-supplied goods whenever population increases, by immigration or through procreation, but the fiscal impact varies widely.
of Sail, naval powers issued privateering licenses to shipowners, allowing and encouraging
them to raid enemy commerce and attack foreign navies during times of war – a system that
bears several similarities to modern military contracting. But private enterprise did not go to
war in a legal vacuum. How do countries make the incentives for private security firms align with national policy in the 21st century?
The complexities are many. Each layer of the United States’ federal structure of government — federal, state, and local — is funded by different types of taxes and each spend their budgets on different programs and in different ways. Many government spending programs are only directed at certain age groups. Public education is one example of a front-loaded cost expended on children and young adults at the beginning of their lifespan, while Medicare and Social Security are back-loaded costs expended closer to the end of the recipient’s life span. The inter temporal structure of many government programs makes age a relevant factor in analyzing the fiscal costs of immigration, but so do other factors such as the skill level, fertility, and language ability of the immigrants themselves. This is not much different from the fiscal impact of newborn children, who consume vast amounts of public schooling before paying taxes. The working life of an immigrant, however, can be shorter than that of a native, because immigrants often immigrate later in life, after their window for taking advantage of government-funded education expires (Rowthorn 2008: 563-564).
The types of public goods consumed by immigrants also affect their fiscal impact. If the public goods are “pure,” meaning that they are non-rivalrous and non-excludable, then more taxpayers in the form of immigrants spread out the tax cost without diminishing the quality of the goods. Immigrants lower the tax burden of providing pure public goods. But, if the public goods are “congestible,” more immigrants could decrease the quality of the goods, prompting the government to spend more tax dollars to maintain the quality. Some congestion occurs for most government-supplied goods whenever population increases, by immigration or through procreation, but the fiscal impact varies widely.
of Sail, naval powers issued privateering licenses to shipowners, allowing and encouraging
them to raid enemy commerce and attack foreign navies during times of war – a system that
bears several similarities to modern military contracting. But private enterprise did not go to
war in a legal vacuum. How do countries make the incentives for private security firms align with national policy in the 21st century?