《国际政治经济学》文献资料（Political Economy of Migration）Racial and Economic Factors in Attitudes to Immigration

Racial and Economic Factors in Attitudes to Immigration Christian Dustmann and Ian P.Preston Abstract In this paper we distinguish between three channels that determine attitudes to further immi- gration:labour market concerns,welfare concerns,and racial or cultural concerns.Our analysis is based on the British Social Attitudes Survey.A unique feature of the survey is that it includes questions on attitudes towards immigration from different origin countries,with populations dif- fering in ethnic similarity to the resident population.It also contains sets of questions relating directly to the labour market,benefit expenditure and welfare concerns,and racial and cultural prejudice.Based on this unique data source,we specify and estimate a multiple factor model that allows comparison of the relative magnitude of association of attitudes to further immigration with the three channels,as well as comparison in responses across potential immigrant groups of different origin.Our results suggest that,overall,welfare concerns play a more important role in determination of attitudes to further immigration than labour market concerns,with their rela- tive magnitude differing across potential emigration regions and characteristics of the respondent. In addition,we find strong evidence that racial or cultural prejudice is an important component to attitudes towards immigration;however,this is restricted to immigration from countries with ethnically different populations. KEYWORDS:international migration,attitudes *Department of Economics and Centre for Research and Analysis of Migration(CReAM),Uni- versity College London and Institute for Fiscal Studies,London.email:c.dustmann@ucl.ac.uk; i.preston@ucl.ac.uk.We are grateful for comments and suggestions from Joseph Altonji,George Borjas,David Card,Edward Glaeser,Timothy Hatton,Hidehiko Ichimura,Zig Layton-Henry,Al- bert Satorra,Christoph M.Schmidt,Frank Windmeijer,and two anonymous referees.We thank the Nuffield Foundation for funding this research

Racial and Economic Factors in Attitudes to Immigration∗ Christian Dustmann and Ian P. Preston Abstract In this paper we distinguish between three channels that determine attitudes to further immi￾gration: labour market concerns, welfare concerns, and racial or cultural concerns. Our analysis is based on the British Social Attitudes Survey. A unique feature of the survey is that it includes questions on attitudes towards immigration from different origin countries, with populations dif￾fering in ethnic similarity to the resident population. It also contains sets of questions relating directly to the labour market, benefit expenditure and welfare concerns, and racial and cultural prejudice. Based on this unique data source, we specify and estimate a multiple factor model that allows comparison of the relative magnitude of association of attitudes to further immigration with the three channels, as well as comparison in responses across potential immigrant groups of different origin. Our results suggest that, overall, welfare concerns play a more important role in determination of attitudes to further immigration than labour market concerns, with their rela￾tive magnitude differing across potential emigration regions and characteristics of the respondent. In addition, we find strong evidence that racial or cultural prejudice is an important component to attitudes towards immigration; however, this is restricted to immigration from countries with ethnically different populations. KEYWORDS: international migration, attitudes ∗Department of Economics and Centre for Research and Analysis of Migration (CReAM), Uni￾versity College London and Institute for Fiscal Studies, London. email: c.dustmann@ucl.ac.uk; i.preston@ucl.ac.uk. We are grateful for comments and suggestions from Joseph Altonji, George Borjas, David Card, Edward Glaeser, Timothy Hatton, Hidehiko Ichimura, Zig Layton-Henry, Al￾bert Satorra, Christoph M. Schmidt, Frank Windmeijer, and two anonymous referees. We thank the Nuffield Foundation for funding this research

Dustmann and Preston:Racial and Economic Factors in Attitudes to Immigration 1 Introduction The debate on immigration features highly on the political agenda both in Europe and in the US.The economic consequences of immigration for the native population,the perceived effects on cultural identity and social cohe- sion,and the strong feelings involved make immigration a topic which figures prominently in political campaigning.Regulations concerning immigration are frequently adjusted according to changes in the economic situation.Often however it is not the economic considerations alone,but shifts in general atti- tudes of the public towards immigration that lead to re-design of immigration policies.To understand what drives individual preferences over immigration policies is thus an important research area,both for descriptive political econ- omy and for policy design,and recently a literature has developed that analyses this. A prime concern often thought to influence the way preferences over further immigration are formed is the way in which individuals perceive the effects of immigration on the labour market.In an important paper on attitudes to- wards further immigration,Scheve and Slaughter(2001)suggest that the way individuals assess these effects may relate to basic intuitions about labour mar- ket equilibria.Simple models with a single output good and multiple labour types (see for example,Altonji and Card,1991)do point to a possibility for immigration to harm those workers who compete with immigrants.2 Scheve and Slaughter(2001)report a strong relationship between education and more favourable attitudes to further immigration,which is consistent with the hy- pothesis that the low skilled are opposed to immigration because of a fear of labour market competition.Mayda(2005),arguing within a similar theoretical setting and using cross-country data,finds evidence for a positive correlation between individual skill level and pro-immigration attitudes in countries where the relative skill ratio of natives to immigrants is high.Using cross-state varia- 1Other papers that analyse the determinants of individual preferences over immigration policies in several countries include Gang,Rivera-Batiz and Yun (2002),Mayda (2005), Fertig and Schmidt(2002),Bauer,Lofstrom and Zimmermann(2001),O'Rourke and Sinnott (2003).Hanson.Scheve and Slaughter (2004.2005)and Facchini and Mayda (2006).Aslund and Rooth(2005)study shifts in attitudes in response to the terrorist attacks of 9/11 2Empirical evidence establishing the existence of adverse effects is scarce (see Borjas 1999b,and Friedberg and Hunt 1995 for overviews),although there is an ongoing debate on the issue(see e.g.Card 2005 and Borjas 2003 for diverging views).Lewis(2003,2005) tests the hypothesis of two alternative adjustment mechanisms to immigration,adjustment through output mix(see the discussions in Leamer and Levinsohn 1995,and Gaston and Nelson 2000),and within-industry technology adjustment,and finds strong evidence for the latter. Published by The Berkeley Electronic Press,2007

1 Introduction The debate on immigration features highly on the political agenda both in Europe and in the US. The economic consequences of immigration for the native population, the perceived e§ects on cultural identity and social cohe￾sion, and the strong feelings involved make immigration a topic which Ögures prominently in political campaigning. Regulations concerning immigration are frequently adjusted according to changes in the economic situation. Often however it is not the economic considerations alone, but shifts in general atti￾tudes of the public towards immigration that lead to re-design of immigration policies. To understand what drives individual preferences over immigration policies is thus an important research area, both for descriptive political econ￾omy and for policy design, and recently a literature has developed that analyses this. A prime concern often thought to ináuence the way preferences over further immigration are formed is the way in which individuals perceive the e§ects of immigration on the labour market. In an important paper on attitudes to￾wards further immigration, Scheve and Slaughter (2001) suggest that the way individuals assess these e§ects may relate to basic intuitions about labour mar￾ket equilibria.1 Simple models with a single output good and multiple labour types (see for example, Altonji and Card, 1991) do point to a possibility for immigration to harm those workers who compete with immigrants.2 Scheve and Slaughter (2001) report a strong relationship between education and more favourable attitudes to further immigration, which is consistent with the hy￾pothesis that the low skilled are opposed to immigration because of a fear of labour market competition. Mayda (2005), arguing within a similar theoretical setting and using cross-country data, Önds evidence for a positive correlation between individual skill level and pro-immigration attitudes in countries where the relative skill ratio of natives to immigrants is high. Using cross-state varia- 1Other papers that analyse the determinants of individual preferences over immigration policies in several countries include Gang, Rivera-Batiz and Yun (2002), Mayda (2005), Fertig and Schmidt (2002), Bauer, Lofstrom and Zimmermann (2001), OíRourke and Sinnott (2003), Hanson, Scheve and Slaughter (2004, 2005) and Facchini and Mayda (2006). Aslund and Rooth (2005) study shifts in attitudes in response to the terrorist attacks of 9/11. 2Empirical evidence establishing the existence of adverse e§ects is scarce (see Borjas 1999b, and Friedberg and Hunt 1995 for overviews), although there is an ongoing debate on the issue (see e.g. Card 2005 and Borjas 2003 for diverging views). Lewis (2003, 2005) tests the hypothesis of two alternative adjustment mechanisms to immigration, adjustment through output mix (see the discussions in Leamer and Levinsohn 1995, and Gaston and Nelson 2000), and within-industry technology adjustment, and Önds strong evidence for the latter. 1 Dustmann and Preston: Racial and Economic Factors in Attitudes to Immigration Published by The Berkeley Electronic Press, 2007

The B.E.Journal of Economic Analysis Policy,Vol.7 [2007],Iss.I (Advances),Art.62 tion for the US,Hanson,Scheve and Slaughter(2005)establish similar evidence and conclude that labour market pressures of immigration are an important determinant of public opinion on immigration restrictions. Labour market competition may,however,not be the only economic con- cern which forms preferences over immigration.According to Borjas (1999a. p.105),the second economic issue in the historical debate over immigration policy in the United States is whether immigrants pay their way in the welfare system.He argues that in the US,immigrants receive a disproportionately large share of the welfare benefits distributed.Borjas(1999a)draws attention to the possible impact of immigration on dependency ratios and the conse- quent effects on the cost of the benefit and social security systems.Since, under progressive taxation,any implied tax burden will bear more heavily on richer households,this provides a possible reason for greater concern among those with higher incomes. There is evidence that public opinion is guided by the view that more immi- grants are an additional burden on the welfare system.Simon(1989)provides a history of anecdotal evidence on public opinion towards further immigration, where both welfare considerations and labour market fears are the two major concerns.Dustmann and Preston (2005),investigating the determinants of the economic impact of immigration,find that welfare considerations are the largest single factor of concern,and more important than labour market con- cerns.3 Using cross-state variation in the US,Hanson,Scheve and Slaughter present evidence that exposure to immigrant fiscal pressure reduces support for immigration in particular among the more skilled.Facchini and Mayda (2006)study welfare-state determinants of individual attitudes towards immi- grants.Based on cross-country data,they report attitudinal responses which they argue make sense in the context of a redistributive fiscal system. In addition to these two economic determinants,there are also non-economic channels through which preferences over further immigration may be shaped. Opposition to immigration may be motivated by reasons which relate to the cultural and ethnic difference of the immigrant population.Opposition may be fueled by a fear of loss of national characteristics and identity,or a taste for cultural homogeneity.Cultural and ethnic distance may severely hinder the social integration process,and this may be considered to induce social ten- sions and costs.There is ample evidence that deeply rooted hostility exists towards immigration groups with largely different cultural and ethnic back- 3Dustmann and Preston's analysis focusses on responses to a question about the economic consequences of immigration.not on whether immigration regulations should be tightened. as do most of the other papers cited. http://www.bepress.com/bejeap/vol7/iss1/art62 2

tion for the US, Hanson, Scheve and Slaughter (2005) establish similar evidence and conclude that labour market pressures of immigration are an important determinant of public opinion on immigration restrictions. Labour market competition may, however, not be the only economic con￾cern which forms preferences over immigration. According to Borjas (1999a, p.105), the second economic issue in the historical debate over immigration policy in the United States is whether immigrants pay their way in the welfare system. He argues that in the US, immigrants receive a disproportionately large share of the welfare beneÖts distributed. Borjas (1999a) draws attention to the possible impact of immigration on dependency ratios and the conse￾quent e§ects on the cost of the beneÖt and social security systems. Since, under progressive taxation, any implied tax burden will bear more heavily on richer households, this provides a possible reason for greater concern among those with higher incomes. There is evidence that public opinion is guided by the view that more immi￾grants are an additional burden on the welfare system. Simon (1989) provides a history of anecdotal evidence on public opinion towards further immigration, where both welfare considerations and labour market fears are the two major concerns. Dustmann and Preston (2005), investigating the determinants of the economic impact of immigration, Önd that welfare considerations are the largest single factor of concern, and more important than labour market con￾cerns.3 Using cross-state variation in the US, Hanson, Scheve and Slaughter present evidence that exposure to immigrant Öscal pressure reduces support for immigration in particular among the more skilled. Facchini and Mayda (2006) study welfare-state determinants of individual attitudes towards immi￾grants. Based on cross-country data, they report attitudinal responses which they argue make sense in the context of a redistributive Öscal system. In addition to these two economic determinants, there are also non-economic channels through which preferences over further immigration may be shaped. Opposition to immigration may be motivated by reasons which relate to the cultural and ethnic di§erence of the immigrant population. Opposition may be fueled by a fear of loss of national characteristics and identity, or a taste for cultural homogeneity. Cultural and ethnic distance may severely hinder the social integration process, and this may be considered to induce social ten￾sions and costs. There is ample evidence that deeply rooted hostility exists towards immigration groups with largely di§erent cultural and ethnic back- 3Dustmann and Prestonís analysis focusses on responses to a question about the economic consequences of immigration, not on whether immigration regulations should be tightened, as do most of the other papers cited. 2 The B.E. Journal of Economic Analysis & Policy, Vol. 7 [2007], Iss. 1 (Advances), Art. 62 http://www.bepress.com/bejeap/vol7/iss1/art62

Dustmann and Preston:Racial and Economic Factors in Attitudes to Immigration grounds.This hostility manifests itself in remarks of politicians and opinion leaders.For instance,the then opposition leader and future British Prime Minister Margaret Thatcher referred in a famous 1978 television interview to a British fear of being "rather swamped by people with a different culture" (Layton-Henry,1992,p.184).Some of the aforementioned papers present ev- idence that attitudinal questions regarding concern about identity or crime (Mayda,2005)or ideology (Scheve and Slaughter 2001)are indeed associated with preferences for tighter immigration regulation. In this paper,we contribute to the literature on attitude formation by analysing the importance of welfare concerns as well as racial and cultural prej- udice,alongside labour market concerns,as three key aspects that determine preferences about immigration.Our methodological approach is to explicitly model these three channels through which immigration attitudes may be af- fected.We do this by formulating and estimating a multiple factor model. The basic idea of our methodology is to use sets of multiple questions address- ing each of the three dimensions of concern (the labour market,welfare,and cultural or racial prejudice)and the correlations among responses to identify common underlying components.We then infer the importance of these in explaining variation in attitudes to immigration. The problem with basing conclusions on interpretation of the association between individual characteristics and immigration attitudes within a labour market model or/and a welfare model is that the most important character- istics are associated with attitudes to immigration through different channels. so that the separation of their roles is difficult.For example,the fact that the highly educated are more liberal in their attitudes may reflect that their labour market position is less vulnerable to immigration of the typically ex- pected skill composition.However,it could also reflect the strong association of education with attitudes to welfare or to culture.In this paper we explic- itly model the channels through which these may impact on attitudes about immigration regulation.An important research question which we address is then the relative contributions of these alternative explanations in explaining shifts in general attitudes of the public towards immigration,and how indi- vidual characteristics work through these channels.A further contribution of our analysis is to separate the role of the three channels in driving attitudes regarding clearly distinguishable immigrant groups.The data on which our analysis is based (various waves of the British Social Attitudes Survey,BSA) allows us to do so,as it is unusual in distinguishing explicitly between atti- tudes to immigration from different regions of origin.Our data also contains extremely specific geographical information on respondents,which allows us to merge in objective environmental information at a very precise spatial level Published by The Berkeley Electronic Press,2007 3

grounds. This hostility manifests itself in remarks of politicians and opinion leaders. For instance, the then opposition leader and future British Prime Minister Margaret Thatcher referred in a famous 1978 television interview to a British fear of being ìrather swamped by people with a di§erent cultureî (Layton-Henry, 1992, p.184). Some of the aforementioned papers present ev￾idence that attitudinal questions regarding concern about identity or crime (Mayda, 2005) or ideology (Scheve and Slaughter 2001) are indeed associated with preferences for tighter immigration regulation. In this paper, we contribute to the literature on attitude formation by analysing the importance of welfare concerns as well as racial and cultural prej￾udice, alongside labour market concerns, as three key aspects that determine preferences about immigration. Our methodological approach is to explicitly model these three channels through which immigration attitudes may be af￾fected. We do this by formulating and estimating a multiple factor model. The basic idea of our methodology is to use sets of multiple questions address￾ing each of the three dimensions of concern (the labour market, welfare, and cultural or racial prejudice) and the correlations among responses to identify common underlying components. We then infer the importance of these in explaining variation in attitudes to immigration. The problem with basing conclusions on interpretation of the association between individual characteristics and immigration attitudes within a labour market model or/and a welfare model is that the most important character￾istics are associated with attitudes to immigration through di§erent channels, so that the separation of their roles is di¢ cult. For example, the fact that the highly educated are more liberal in their attitudes may reáect that their labour market position is less vulnerable to immigration of the typically ex￾pected skill composition. However, it could also reáect the strong association of education with attitudes to welfare or to culture. In this paper we explic￾itly model the channels through which these may impact on attitudes about immigration regulation. An important research question which we address is then the relative contributions of these alternative explanations in explaining shifts in general attitudes of the public towards immigration, and how indi￾vidual characteristics work through these channels. A further contribution of our analysis is to separate the role of the three channels in driving attitudes regarding clearly distinguishable immigrant groups. The data on which our analysis is based (various waves of the British Social Attitudes Survey, BSA) allows us to do so, as it is unusual in distinguishing explicitly between atti￾tudes to immigration from di§erent regions of origin. Our data also contains extremely speciÖc geographical information on respondents, which allows us to merge in objective environmental information at a very precise spatial level 3 Dustmann and Preston: Racial and Economic Factors in Attitudes to Immigration Published by The Berkeley Electronic Press, 2007

The B.E.Journal of Economic Analysis Policy,Vol.7 [2007],Iss.I (Advances),Art.62 on local unemployment and ethnic composition. We allow responses of the native population to differ along various di- mensions.We distinguish between different occupation groups (separating manual and non-manual workers),and different education groups(separating low,medium and high education groups).This allows us to directly investi- gate the association of cultural and racial prejudice,labour market concerns, and welfare concerns with preferences towards more immigration across dif- ferent skill levels.We therefore use a more direct approach than Scheve and Slaughter(2001)in assessing whether the differences in relative preferences to- wards further immigration across skill groups are compatible with predictions of equilibrium trade and labour market models.Furthermore,the distinction made in our data between immigrants of different ethnic and cultural back- grounds,allows us to assess the relative association of each of these factors with preferences towards further immigration for different skill groups,and across immigrant populations of different ethnic and cultural dissimilarity. Our findings are interesting and novel in several respects.First,our descrip- tive evidence shows that opposition towards further immigration is strongly related to the proposed origin of immigrants,with much larger resistance the more ethnically distinct the immigrant population is.Second,we establish that welfare concerns are generally a more important driver of attitudes than labour market concerns,in particular towards groups with a high welfare de- pendence.These views are strongest among respondents who are likely to be the biggest contributors if immigration,as sometimes suggested by those most hostile,induces a tax-financed increase in welfare dependency.Our analysis also shows that racial/cultural prejudice is an important underlying channel through which overall attitudes are driven,in particular for the low skilled. The structure of the paper is as follows.Section 2 outlines our econometric model,and explains estimation and identification of the parameters.Section 3 provides a brief overview of migration to the UK,documents skills and occu- pational achievements of immigrants,and discusses the data we use.Section 4 provides some descriptive evidence.Section 5 presents and discusses results, and section 6 concludes. http://www.bepress.com/bejeap/vol7/iss1/art62

on local unemployment and ethnic composition. We allow responses of the native population to di§er along various di￾mensions. We distinguish between di§erent occupation groups (separating manual and non-manual workers), and di§erent education groups (separating low, medium and high education groups). This allows us to directly investi￾gate the association of cultural and racial prejudice, labour market concerns, and welfare concerns with preferences towards more immigration across dif￾ferent skill levels. We therefore use a more direct approach than Scheve and Slaughter (2001) in assessing whether the di§erences in relative preferences to￾wards further immigration across skill groups are compatible with predictions of equilibrium trade and labour market models. Furthermore, the distinction made in our data between immigrants of di§erent ethnic and cultural back￾grounds, allows us to assess the relative association of each of these factors with preferences towards further immigration for di§erent skill groups, and across immigrant populations of di§erent ethnic and cultural dissimilarity. Our Öndings are interesting and novel in several respects. First, our descrip￾tive evidence shows that opposition towards further immigration is strongly related to the proposed origin of immigrants, with much larger resistance the more ethnically distinct the immigrant population is. Second, we establish that welfare concerns are generally a more important driver of attitudes than labour market concerns, in particular towards groups with a high welfare de￾pendence. These views are strongest among respondents who are likely to be the biggest contributors if immigration, as sometimes suggested by those most hostile, induces a tax-Önanced increase in welfare dependency. Our analysis also shows that racial/cultural prejudice is an important underlying channel through which overall attitudes are driven, in particular for the low skilled. The structure of the paper is as follows. Section 2 outlines our econometric model, and explains estimation and identiÖcation of the parameters. Section 3 provides a brief overview of migration to the UK, documents skills and occu￾pational achievements of immigrants, and discusses the data we use. Section 4 provides some descriptive evidence. Section 5 presents and discusses results, and section 6 concludes. 4 The B.E. Journal of Economic Analysis & Policy, Vol. 7 [2007], Iss. 1 (Advances), Art. 62 http://www.bepress.com/bejeap/vol7/iss1/art62

Dustmann and Preston:Racial and Economic Factors in Attitudes to Immigration 2 Separating Factors in Attitudes to Immigra- tion 2.1 Econometric Specification The idea of our empirical approach is as follows.The variable we wish to explain is the respondent's attitude to further immigration.In our data,this question is asked four times,distinguishing between four different origin re- gions (India/Pakistan,the West Indies,Europe,and Australia/New Zealand). We relate these responses to three(unobserved)channels (or factors)through which attitudes may be formed:labour market concerns,welfare concerns, and cultural or racial prejudice.We identify three sets of questions in the BSA regarding issues which are each strongly related to one or other of these channels.Questions regarding labour market security include questions on the fear of job loss,the ease of finding a job and expected future wage paths. Questions indicating welfare concerns include a question on adequacy of ben- efit levels,perception of recipients'needs,and willingness to pay for increased public social spending.Questions indicating racial or cultural attitudes in- clude attitudes towards inter-ethnic marriage,having a minority boss,and self admitted prejudice against minorities.We report the wording of the questions in Appendix D. We use responses to these sets of questions to isolate a common element for each of the three factors.One way of doing this would be to take some average of each of the three sets of responses for each respondent,and to regress,in a second step,the overall response to the immigration question on the new variables obtained in this way.This is conceptually similar to our approach, which can be thought of as weighting and normalising the single questions when combining them into a single factor.The approach we follow makes more efficient use of the data.Further,we adopt a normalisation that allows comparison of magnitudes of coefficients across the different responses. We now explain our procedure in more detail.Our model consists of three equations: yi=fiA XiA +ui, (1) fi=XiB+vi, (2) z=fiM+XiC+wi. (3) Published by The Berkeley Electronic Press,2007

2 Separating Factors in Attitudes to Immigra￾tion 2.1 Econometric SpeciÖcation The idea of our empirical approach is as follows. The variable we wish to explain is the respondentís attitude to further immigration. In our data, this question is asked four times, distinguishing between four di§erent origin re￾gions (India/Pakistan, the West Indies, Europe, and Australia/New Zealand). We relate these responses to three (unobserved) channels (or factors) through which attitudes may be formed: labour market concerns, welfare concerns, and cultural or racial prejudice. We identify three sets of questions in the BSA regarding issues which are each strongly related to one or other of these channels. Questions regarding labour market security include questions on the fear of job loss, the ease of Önding a job and expected future wage paths. Questions indicating welfare concerns include a question on adequacy of ben￾eÖt levels, perception of recipientsíneeds, and willingness to pay for increased public social spending. Questions indicating racial or cultural attitudes in￾clude attitudes towards inter-ethnic marriage, having a minority boss, and self admitted prejudice against minorities. We report the wording of the questions in Appendix D. We use responses to these sets of questions to isolate a common element for each of the three factors. One way of doing this would be to take some average of each of the three sets of responses for each respondent, and to regress, in a second step, the overall response to the immigration question on the new variables obtained in this way. This is conceptually similar to our approach, which can be thought of as weighting and normalising the single questions when combining them into a single factor. The approach we follow makes more e¢ cient use of the data. Further, we adopt a normalisation that allows comparison of magnitudes of coe¢ cients across the di§erent responses. We now explain our procedure in more detail. Our model consists of three equations: y i = fi + Xi A + ui ; (1) fi = Xi B + vi ; (2) z i = fi M + Xi C + wi : (3) 5 Dustmann and Preston: Racial and Economic Factors in Attitudes to Immigration Published by The Berkeley Electronic Press, 2007

The B.E.Journal of Economic Analysis Policy,Vol.7 [2007],Iss.I (Advances),Art.62 Equation (1)relates the responses to the four questions regarding further immigration in the 1 x 4 vector y;to the three "latent factors"fi which we have described above (labour market,welfare,and cultural/racial concerns), conditional on individual and contextual information Xi.Consequently,fi is a 1 x 3 vector,with coefficients in the 3 x 4 matrix A.As we only observe discrete responses to questions regarding further immigration,y;is a vector of latent responses.A is a k x 4 matrix of conditional responses of attitudes to k other observed characteristics Xi(such as age,education etc.).The term ui is an error term,and we assume that ui~N(0,u).The parameters in the matrix A are the main parameters of interest;they measure the magnitude of association between each of the three concerns we consider,and attitudes to further immigration. Equation(2)relates the latent factors to the regressors Xi,where B is a k x3 matrix of coefficients,and vi~N(0,)Finally,equation (3)relates the set of responses that relate to each of the three factors,z,to the latent factors fi and observed characteristics Xi.In our case,we observe 10 responses that "reveal"the fi:four for labour market concerns,three for welfare concerns, and three for racial and cultural concerns.Accordingly,2;is a 1 x 10 vector, M is a 3 x 10 matrix of coefficients,and C is a k x 10 matrix of conditional responses to Xi.Again,as only discrete responses are observed,2 is a vector of latent responses.We assume that wi~N(0,) We further assume that ui and wi are uncorrelated with Xi and fi,which implies that they are also uncorrelated with vi.Therefore,Elu==0 andE[w=∑uw=0. Consider now the reduced form equations,which are obtained by substi- tuting (2)in (1)and (3): Xi(BA+A)+ui+viA=XiT1+ei, (4 and =Xi(BM+C)+wi+viM=XiT2+e2i, (5) where i=[eile2i]'~N(0,>)The matrix ∑u+A∑，A'∑uw+M∑，' 212 w+A∑，M'∑w+M∑M' (6) is the (4+10)x(4+10)variance-covariance matrix of the reduced form residuals and∑e denotes E(uw). http://www.bepress.com/bejeap/vol7/iss1/art62 6

Equation (1) relates the responses to the four questions regarding further immigration in the 1 4 vector y i to the three ìlatent factorsî fi which we have described above (labour market, welfare, and cultural/racial concerns), conditional on individual and contextual information Xi . Consequently, fi is a 1 3 vector, with coe¢ cients in the 3 4 matrix . As we only observe discrete responses to questions regarding further immigration, y i is a vector of latent responses. A is a k 4 matrix of conditional responses of attitudes to k other observed characteristics Xi (such as age, education etc.). The term ui is an error term, and we assume that ui  N(0; u). The parameters in the matrix are the main parameters of interest; they measure the magnitude of association between each of the three concerns we consider, and attitudes to further immigration. Equation (2) relates the latent factors to the regressors Xi , where B is a k3 matrix of coe¢ cients, and vi  N(0; v). Finally, equation (3) relates the set of responses that relate to each of the three factors, z i , to the latent factors fi and observed characteristics Xi . In our case, we observe 10 responses that ìrevealî the fi : four for labour market concerns, three for welfare concerns, and three for racial and cultural concerns. Accordingly, z i is a 1 10 vector, M is a 3 10 matrix of coe¢ cients, and C is a k 10 matrix of conditional responses to Xi . Again, as only discrete responses are observed, z i is a vector of latent responses. We assume that wi  N(0; w): We further assume that ui and wi are uncorrelated with Xi and fi , which implies that they are also uncorrelated with vi . Therefore, E[uiv 0 i ] = uv = 0 and E[wiv 0 i ] = wv = 0. Consider now the reduced form equations, which are obtained by substi￾tuting (2) in (1) and (3): y i = Xi(B + A) + ui + vi = Xi￾1 + 1i ; (4) and z i = Xi(BM + C) + wi + vi M = Xi￾2 + 2i ; (5) where i = [1i j2i ] 0  N(0; ). The matrix  = 0 @ u + v 0 uw + M v 0  0 uw + v M0 w + M v M0 1 A  0 @ 11 12  0 12 22 1 A (6) is the (4+10)(4+10) variance-covariance matrix of the reduced form residuals and uw denotes E(uiw 0 i ). 6 The B.E. Journal of Economic Analysis & Policy, Vol. 7 [2007], Iss. 1 (Advances), Art. 62 http://www.bepress.com/bejeap/vol7/iss1/art62

Dustmann and Preston:Racial and Economic Factors in Attitudes to Immigration Our estimation strategy now proceeds in three stages.In the first stage, we estimate the reduced form coefficient matrix I =TT2]'.We do that by estimating the coefficients of each equation in (4)and (5)(corresponding to the rows of r)separately by independent (ordered)probits.Due to the discrete nature of the dependent variables,we can only estimate their ratios to the standard deviations of the associated error components. In the second stage we obtain the parameters in X.Again,a normali- sation assumption is required.We adopt the identifying normalisation that the diagonal elements in X and in X are such as to make the diagonal ele- ments of e equal to unity.To estimate e,we take each pairing of questions successively,and estimate the corresponding off-diagonal component of e by bivariate maximum likelihood.We fix the coefficients of the two equations concerned at the values in I estimated in the previous stage.4 Finally,in the third step we estimate the parameters in M,A and X using ninimum distance estimation and the restrictions∑22=∑e+M∑，M'and 12=+MA'.To do so,we make the following assumptions.First,we assume that each of our indicator questions in z*is indicative of one and only one factor.For instance,the three questions on the labour market are assumed to be affected only through the labour market channel,the three questions on welfare concerns only through the welfare channel,and so on.This means that we assume that MM'is a block diagonal matrix,with only one non-zero element in each row of M.Second,we assume that all correlation between responses to these questions (conditional on the regressors Xi)is accounted for by the factor structure,which implies diagonality of the matrix.Notice that we allow for correlation between the factors,since is not required to be diagonal.Finally,we set the diagonal elements of o to unity,which is simply a normalising assumption. Given these assumptions,there is sufficient information in >22 from the con- ditional correlations between responses within blocks to identify all elements of M.5 Having identified M,the off-diagonal elements of Xo are identified without 4Consider for instance the responses to the first two immigration questions,with the latent two equation model being yii Xi71+e1i and y2=Xiy2+e2i.We estimate the covariance Cov(eli,2i)using a bivariate probit likelihood,where we fix Y1 and Y2 at the estimates obtained in the first stage,Y and 72. 5Remembering the particular structure of MEM',suppose that the ith diagonal block has gi elements.Then there are gi(qi-1)/2 off-diagonal elements in the corresponding block of S22 from which to identify them.This is sufficient if gi 3,which is so for each block in our case.This is not to say that the condition is necessary since there is also identifying information in the elements of off-diagonal blocks. Published by The Berkeley Electronic Press,2007 7

Our estimation strategy now proceeds in three stages. In the Örst stage, we estimate the reduced form coe¢ cient matrix ￾ = [￾1j￾2] 0 . We do that by estimating the coe¢ cients of each equation in (4) and (5) (corresponding to the rows of ￾) separately by independent (ordered) probits. Due to the discrete nature of the dependent variables, we can only estimate their ratios to the standard deviations of the associated error components. In the second stage we obtain the parameters in  . Again, a normali￾sation assumption is required. We adopt the identifying normalisation that the diagonal elements in u and in w are such as to make the diagonal ele￾ments of  equal to unity. To estimate  , we take each pairing of questions successively, and estimate the corresponding o§-diagonal component of  by bivariate maximum likelihood. We Öx the coe¢ cients of the two equations concerned at the values in ￾ estimated in the previous stage.4 Finally, in the third step we estimate the parameters in M, and v using minimum distance estimation and the restrictions 22 = w + M v M0 and 12 = uw +M v 0 . To do so, we make the following assumptions. First, we assume that each of our indicator questions in z is indicative of one and only one factor. For instance, the three questions on the labour market are assumed to be a§ected only through the labour market channel, the three questions on welfare concerns only through the welfare channel, and so on. This means that we assume that MM0 is a block diagonal matrix, with only one non-zero element in each row of M. Second, we assume that all correlation between responses to these questions (conditional on the regressors Xi) is accounted for by the factor structure, which implies diagonality of the w matrix. Notice that we allow for correlation between the factors, since v is not required to be diagonal. Finally, we set the diagonal elements of v to unity, which is simply a normalising assumption. Given these assumptions, there is su¢ cient information in 22 from the con￾ditional correlations between responses within blocks to identify all elements of M. 5 Having identiÖed M, the o§-diagonal elements of v are identiÖed without 4Consider for instance the responses to the Örst two immigration questions, with the latent two equation model being y 1i = Xi 1 + 1i and y 2i = Xi 2 + 2i . We estimate the covariance Cov(1i ; 2i) using a bivariate probit likelihood, where we Öx 1 and 2 at the estimates obtained in the Örst stage, ^1 and ^2 . 5Remembering the particular structure of MM0 , suppose that the ith diagonal block has qi elements. Then there are qi (qi￾1)=2 o§-diagonal elements in the corresponding block of 22 from which to identify them. This is su¢ cient if qi  3, which is so for each block in our case. This is not to say that the condition is necessary since there is also identifying information in the elements of o§-diagonal blocks. 7 Dustmann and Preston: Racial and Economic Factors in Attitudes to Immigration Published by The Berkeley Electronic Press, 2007

The B.E.Journal of Economic Analysis Policy,Vol.7 [2007],Iss.I (Advances),Art.62 further restriction from the remaining elements of X22,that is to say from the correlations between elements in different blocks.Since all conditional correlation between responses in different blocks is assumed to be driven solely by the correlation between factors,considerable overidentifying restrictions are involved at this point.We report tests of these restrictions. Identification of A comes from the elements of 12.We assume that the correlation between responses to the immigration questions y*and the indica- tor questions 2*is accounted for by the factors f,conditional on observables X.This implies that∑uw=0 and therefore2=M∑，'.With M and∑w identified before,this is sufficient to identify A if p<g,which is to say that there are fewer factors than indicator questions.With p =3 and g =10,this is clearly the case in our application.To estimate the parameters in M,A and we impose in the third stage the restrictions on 2 and 22 by minimum distance. Computation of the variance-covariance matrix of the parameters is de- scribed in full in Appendix A.The estimation procedure outlined above does not guarantee positive semi-definiteness of the estimated asymptotic variance- covariance matrix for the parameter estimates,and we describe in the Appen- dix how we deal with that.6 Our main focus is the coefficients in A,and how they relate to each other in magnitude.Note that A dy/dfi and neither y nor fi,both being latent,have a unique natural scale of variation.However,the commonality of normalisation imposed here justifies comparability of coefficients within A.7 which is important for the interpretation of our results below.Given also the common form of the questions regarding immigration policy,it makes sense to compare the elements in A in terms of effects on probabilities,which is how we report them below.s The most critical assumption sustaining a causal interpretation of A is that u =0,which implies that E(y,)=E((f,),Xi).In other words,conditional on observables Xi,all association between y and z;should come through the three factors.This assumption would be violated if,for example,unobserved individual heterogeneity that affects labour market con- cerns is at the same time correlated with opposition to further immigration, conditional on Xi.Although we believe that much of the individual hetero- 6All programs are written by the authors in GAUSS and are available on request. 7That is to say,the residual variances along the diagonals of Ee and are each set to unity. sIn other words,we report (XiP)A,where we evaluate X at sample averages so that the values can be interpreted as the effect of a one standard deviation change in the relevant component of fi on the probability of hostility to immigration. http://www.bepress.com/bejeap/vol7/iss1/art62 8

further restriction from the remaining elements of 22, that is to say from the correlations between elements in di§erent blocks. Since all conditional correlation between responses in di§erent blocks is assumed to be driven solely by the correlation between factors, considerable overidentifying restrictions are involved at this point. We report tests of these restrictions. IdentiÖcation of comes from the elements of 12. We assume that the correlation between responses to the immigration questions y and the indica￾tor questions z is accounted for by the factors f, conditional on observables X. This implies that uw = 0 and therefore 12 = M v 0 . With M and v identiÖed before, this is su¢ cient to identify if p  q, which is to say that there are fewer factors than indicator questions. With p = 3 and q = 10, this is clearly the case in our application. To estimate the parameters in M, and v, we impose in the third stage the restrictions on 12 and 22 by minimum distance. Computation of the variance-covariance matrix of the parameters is de￾scribed in full in Appendix A. The estimation procedure outlined above does not guarantee positive semi-deÖniteness of the estimated asymptotic variance￾covariance matrix for the parameter estimates, and we describe in the Appen￾dix how we deal with that.6 Our main focus is the coe¢ cients in , and how they relate to each other in magnitude. Note that = dy i =dfi and neither y i nor fi , both being latent, have a unique natural scale of variation. However, the commonality of normalisation imposed here justiÖes comparability of coe¢ cients within , 7 which is important for the interpretation of our results below. Given also the common form of the questions regarding immigration policy, it makes sense to compare the elements in in terms of e§ects on probabilities, which is how we report them below.8 The most critical assumption sustaining a causal interpretation of is that uw = 0, which implies that E(y i jz i ; Xi) = E(y i jE(fi jz i ; Xi); Xi). In other words, conditional on observables Xi , all association between y i and z i should come through the three factors. This assumption would be violated if, for example, unobserved individual heterogeneity that a§ects labour market con￾cerns is at the same time correlated with opposition to further immigration, conditional on Xi . Although we believe that much of the individual hetero- 6All programs are written by the authors in GAUSS and are available on request. 7That is to say, the residual variances along the diagonals of  and v are each set to unity. 8 In other words, we report (Xi￾), where we evaluate X at sample averages so that the values can be interpreted as the e§ect of a one standard deviation change in the relevant component of fi on the probability of hostility to immigration. 8 The B.E. Journal of Economic Analysis & Policy, Vol. 7 [2007], Iss. 1 (Advances), Art. 62 http://www.bepress.com/bejeap/vol7/iss1/art62

Dustmann and Preston:Racial and Economic Factors in Attitudes to Immigration geneity that is not already captured by the factors is likely to be captured by our observables Xi,we can not exclude this possibility and therefore prefer to refer to the estimated parameters as "associations"rather than "effects" The fact that none of the questions on which the identification of our factors is based refer specifically to further immigration can be regarded as reducing the potential for spurious correlation. 3 Background and Data 3.1 Immigrants in the UK According to the 2001 UK Census,the percentage of foreign-born individuals in the British population is 8.3 percent (or 4.9 million),almost twice as high as in 1951,when the corresponding number was 4.2 percent.Britain has always been a destination for intra-European immigrants,most notably for the Irish (Chance,1996).However,in the post-war period,Britain saw large numbers of immigrants arriving who were ethnically different from the predominantly white resident population. Immigration of Commonwealth citizens was most pronounced in the two decades after the war.While the early 1950s were characterised by migration from the Caribbean,in the late 1950s a growing number of immigrants ar- rived from the Indian subcontinent.Later immigrants arrived from Pakistan and Bangladesh.Labour market shortages in the period after the war led also to recruitment of European workers to fill certain labour market short- ages.These workers were predominantly from Southern Europe,but also from Poland.After the 1971 act,an increasing fraction of immigration was due to family unification,which remained for a time largely unrestricted.Favourable economic conditions in Europe prevented large migrations after 1971.Govern- mental response to the Ugandan Asian crisis of 1972 nevertheless led,despite the restrictive legislation adopted by then,to a renewed boost in the settle- ment of those of Asian origin.For further details on immigration to the UK. see Wheatley-Price and Hatton (2005)and Spencer (1997). The questions regarding immigrant origin asked in the BSA and which we consider in our analysis below,relate to individuals from three immigration areas:the West Indies,India and Pakistan,the area of the (then)European common market,and Australia/New Zealand.Over the period which we con- sider (1983-1990),immigrants from these four groups form about 63 percent of Throughout the paper,we refer to this source of immigration as "Asian",in line with wording typically used in the BSA. Published by The Berkeley Electronic Press,2007 9

geneity that is not already captured by the factors is likely to be captured by our observables Xi , we can not exclude this possibility and therefore prefer to refer to the estimated parameters as "associations" rather than "e§ects". The fact that none of the questions on which the identiÖcation of our factors is based refer speciÖcally to further immigration can be regarded as reducing the potential for spurious correlation. 3 Background and Data 3.1 Immigrants in the UK According to the 2001 UK Census, the percentage of foreign-born individuals in the British population is 8.3 percent (or 4.9 million), almost twice as high as in 1951, when the corresponding number was 4.2 percent. Britain has always been a destination for intra-European immigrants, most notably for the Irish (Chance, 1996). However, in the post-war period, Britain saw large numbers of immigrants arriving who were ethnically di§erent from the predominantly white resident population. Immigration of Commonwealth citizens was most pronounced in the two decades after the war. While the early 1950s were characterised by migration from the Caribbean, in the late 1950s a growing number of immigrants ar￾rived from the Indian subcontinent. Later immigrants arrived from Pakistan and Bangladesh. Labour market shortages in the period after the war led also to recruitment of European workers to Öll certain labour market short￾ages. These workers were predominantly from Southern Europe, but also from Poland. After the 1971 act, an increasing fraction of immigration was due to family uniÖcation, which remained for a time largely unrestricted. Favourable economic conditions in Europe prevented large migrations after 1971. Govern￾mental response to the Ugandan Asian crisis of 1972 nevertheless led, despite the restrictive legislation adopted by then, to a renewed boost in the settle￾ment of those of Asian origin. For further details on immigration to the UK, see Wheatley-Price and Hatton (2005) and Spencer (1997). The questions regarding immigrant origin asked in the BSA and which we consider in our analysis below, relate to individuals from three immigration areas: the West Indies, India and Pakistan,9 the area of the (then) European common market, and Australia/New Zealand. Over the period which we con￾sider (1983-1990), immigrants from these four groups form about 63 percent of 9Throughout the paper, we refer to this source of immigration as "Asian", in line with wording typically used in the BSA. 9 Dustmann and Preston: Racial and Economic Factors in Attitudes to Immigration Published by The Berkeley Electronic Press, 2007