Migrant Remittances and Fiscal Policy Attitudes
PS7-5
Presented by: Sarah Berens
How does the receipt of migrant remittances affect individual support for different types of public spending and taxation? We argue that remittances allow recipients to purchase certain 'substitutable' public services (like health and education) in the private market, which makes them less willing to pay taxes to support government spending on these services. Remittance recipients are more supportive of government provision of 'non-substitutable' public services like security and infrastructure because they find it difficult to purchase these on the private market using the remittances they receive. To pay for these public services, remittance recipients prefer to raise income taxes (which they do not pay on remittances income) than consumption taxes. Using experimental evidence from Mexico, we investigate whether those receiving remittances are distinct from other individuals in their willingness to pay more taxes under a hypothetical increase in spending on a particular type of public good, and their preferences for reallocating resources between different public good areas under a budget constraint. We provide evidence for our argument, demonstrating that remittances are an important driver of fiscal policy attitudes.