Emigration, Social Remittances and Fiscal Policy Preferences: Experimental Evidence From Mexico

Abstract

How does emigration affect tax preferences in migrant-sending countries? Experiencing public services in a high tax-capacity destination may reduce support for tax increases by throwing fiscal failure at home into stark relief (the socialization hypothesis). Alternatively, migrants’ exclusion from certain public services may increase desire to fund these services in migrant origin countries (the exclusion hypothesis). We test these competing hypotheses with an online survey experiment in Mexico and explore variation in US healthcare access on fiscal policy preferences of migrant households. Migrant households, especially those with returned migrant members, are more supportive of taxation when tax revenue is earmarked for healthcare, a service to which many Mexican immigrants in the US lack access. It is migrants’ exclusion from, rather than their socialization into, the fiscal contract in destination countries that influences fiscal policy preferences in their countries of origin.