Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311962 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17523
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Immigration may affect income inequality not only by changing factor prices but also by inducing policy makers to adjust the prevailing income tax system. We assess the relative importance of these economic and political channels using administrative data from Switzerland where local authorities have a high degree of tax autonomy. We show that immigrant inflows not only raise gross earnings inequality but also reduce the progressivity of local income taxes, further increasing after-tax inequality. Our estimates suggest that around 10 percent of the impact of immigration on the net interquartile and interdecile earnings gaps can be attributed to the political channel.
Subjects: 
immigration
income taxes
earnings inequality
JEL: 
H23
H24
H71
J31
J61
Document Type: 
Working Paper

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