The Grecian Horse II: Do Immigrants Import Their Home Country’s Institutions Into Their Host Countries? The Case of the American States

Abstract

This paper examines whether the institutional quality of immigrants’ origin countries matters when testing the relationship between immigration and the US states’ economic freedom scores. Our results show that, in the short run, the relationship between economic freedom and immigrants from countries ranked in the second quartile of the Fraser Institute’s Economic Freedom of the World report is negative and statistically significant, but it is not economically significant. In the long run, the relationship between economic freedom and immigrants from countries ranked in the bottom quartile of the EFW report is positive and statistically significant, but it is not economically significant. For other immigrant groups coming from countries that rank higher in terms of economic freedom, the relationship is negative but is not statistically significant or is weakly significant. Our results are robust to various specifications.