Immigration, Migration, and State Redistributive Expenditures

The effect of immigration on state and local budgets is a frequent topic of both political and academic conversations. A controversial issue among scholars is whether or not immigration induces outmigration of low income native born residents, a population movement which would potentially have implications for the jurisdictional distribution of immigration's fiscal impact. It is hypothesized here that if interstate poverty migration occurred, it should cause fiscal spillovers by distributing some of the public sector burden of immigration from immigrant “host” states to neighboring states. This paper uses cross-sectional state data from 1988–1995 to explore the relationship between immigration in neighbor states and state redistributive expenditures. The results suggest that there is a positive relationship between immigration to neighboring states and redistributive expenditures. While most discussion of the fiscal impact of immigration has focused on the effects on host states and localities, the implications of these findings are that there are fiscal spillovers to neighboring states, suggesting that fiscal impacts on host states have been over-estimated and effects on neighboring states have been underestimated. Additionally, the implications of recent welfare reform, which gives states the opportunity to use citizenship as a criterion for program eligibility, are discussed.