Do Immigrants Affect Economic Institutions? Evidence from the American States

Abstract

Abstract Standard economic models predict large economic gains from liberalized immigration. However, those models assume that immigrants would have no effect on the causes of economic prosperity in destination countries. Immigrants could reduce the quality of economic institutions in destination countries, thus undermining the economic gains from liberalized immigration. This paper uses an epidemiological model to investigate how heterogeneously distributed immigrants affected the economic institutions of American states over the 1980–2010 period under the assumption that institutions are highly responsive to changes in the immigrant population. We find that state economic institutions do not change much in response to immigrants.