A large literature exploits geographic variation in the concentration of immigrants to identify their impact on a variety of outcomes. To address the endogeneity of immigrants' location choices, the most commonly-used instrument interacts national inflows by country of origin with immigrants' past geographic distribution. We present evidence that estimates based on this "shiftshare" instrument conflate the short-and long-run responses to immigration shocks. If the spatial distribution of immigrant inflows is stable over time, the instrument is likely to be correlated with ongoing responses to previous supply shocks. Estimates based on the conventional shift-share instrument are therefore unlikely to identify the short-run causal effect. We propose a "multiple instrumentation" procedure that isolates the spatial variation arising from changes in the countryof-origin composition at the national level and permits us to estimate separately the short-and long-run effects. Our results are a cautionary tale for a large body of empirical work, not just on immigration, that rely on shift-share instruments for causal inference.
The world currently has more refugees and internally displaced persons than it has had since World War II. Yet the readiness of many wealthy countries to provide asylum to these refugees is waning, and a major reason for this is the fiscal burden that would result from larger refugee intakes. To evaluate the size of this fiscal burden, this study estimates the net fiscal redistribution to the total refugee population in Sweden, the country with the largest per capita refugee immigration rate in the Western world since the early 1980s. The total redistribution in 2007 corresponds to 1.0 percent of Swedish GDP in that year. Four‐fifths of the redistribution is due to lower public per capita revenues from refugees compared with the total population, and one‐fifth to higher per capita public costs.
With the expansion of the European Union from 15 to 25 member countries in 2004, fears of migrants’ excessive welfare use led 14 of the 15 older member countries to impose restrictions on the access of citizens of the new member countries – the A10 countries – to their welfare systems. Sweden was the only exception. This paper evaluates the net contribution of post‐enlargement A10 immigrants to Swedish public finances in 2007. On average, A10 immigrants generate less public revenue than the population on average, but they also cost less. The net result is a zero or small positive net contribution. In particular, A10 immigrants do not benefit more from basic social welfare than the population on average. The discounted net contribution over the A10 immigrants’ lifetimes may be positive or negative depending, for example, on their income assimilation rates and on future real interest rates.
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