Does Immigration Impact Economic Freedom?

Abstract

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. 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.

Keywords: Economic Freedom, Immigration, Institutions

JEL Classification: J1, J6, P1