Essays in Political Economy of Redistribution and Immigration

Abstract

This dissertation studies the interaction of politicians’ and voters’ incentives and its effect on redistributive and immigration policies. The first chapter ``Redistribution, Polarization, and Ideology'' focuses on the effect of income inequality and party polarization on redistributive policy, both theoretically and empirically. I demonstrate that income inequality and party polarization on social issues push redistributive policy in opposite directions. In particular, when the importance of ideology for the voters rises with their income, polarization discourages redistribution. Using data from the American National Election Study and the Census, I verify that it is indeed the case that the importance attached to ideological issues is increasing in the voters' income. Effects of ``income elastic'' ideology can account for the observed stability of redistribution policy in the U.S. The second chapter, ``Foreign Born U.S. Citizens and Immigration Policy'', studies the impact of immigration on immigration reforms, and decomposes the effects of naturalized and non-naturalized immigrants. Using Census data and roll call votes for the House on 2005 and 2006 immigration bills, we find that immigration affects Democratic and Republican parties differently. While the effect of non-naturalized immigrants can be explained by congressional district's socio-economic characteristics, naturalized immigrants exert an additional effect linked to their ability to vote in congressional elections. Higher naturalized immigrant population increases the probability that Democrats vote in favor of immigration, and decreases it for Republicans, suggesting opposite electoral incentives for the two parties, that can be interpreted in a framework of rational office-motivated incumbents seeking reelection.