Emigration and Fiscal Policy Preferences: Experimental Evidence from Mexico

How does emigration influence the fiscal contract between citizens who stay behind and the state in countries with high levels of emigration? In this paper, we explore how connections with migrants living in high-capacity states influence citizen support for tax increases for funding public services in low-capacity contexts? Our focus is on migration from Mexico (a low-capacity democracy) to the US (a high-capacity democracy). Employing an online survey vignette experiment in Mexico in 2021, we examine how different tax instruments and earmarking spending for specific policies influence respondents’ support for a tax increase in migrant and non-migrant households. We find strong evidence for a social remittance channel by which emigration affects spending preferences in low-capacity contexts, which is heavily influenced by the context of migrant exclusion from state-provided protection in the US. Returning migrant households are more supportive of higher taxation when tax revenue is earmarked for spending on public healthcare (a service from which most Mexican immigrants in the US lack access to). Those with family members living in US states where undocumented immigrants are more likely to be stopped and exposed to police abuse are not only more supportive of higher taxation for spending in public healthcare but also less supportive of earmarking taxes to security and justice. Our findings remain unchanged after including socioeconomic and demographic covariates and controlling for economic remittances and emigration intentions in the regression models.