Taxation with Representation: The Political Economy of Foreigners’ Voting Rights

This paper examines natives’ decision to grant political rights to foreign residents based on their contribution to a redistribution mechanism that finances a private and a public good. We propose a model where agents’ redistributive preferences are determined by their skill level and their cultural beliefs about public spending, which vary by skill and nationality. Contrary to a commonly held view in the political economy literature, we show that low-skill natives are willing to enfranchise relatively skilled foreigners as long as these foreigners have sufficiently liberal beliefs towards public spending. Moreover, we establish that the political rights that low-skill natives are prepared to grant to foreign residents is a nonmonotonic function of immigration’s skill level and cultural support for public expenditure. In particular, low-skill natives favor greater political integration for less-skilled or more liberal foreigners if and only if these foreigners’ average relative preferences for the private and the public good are sufficiently close to their own. We provide empirical support for some of the theoretical predictions of the model using an original municipality-level dataset of Swiss referenda about non-citizen voting rights. Our results indicate that municipalities where a higher share of natives received social transfers were more likely to support immigrant voting and that this effect was greater where foreigners were poorer and emigrated from less economically conservative countries.