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This paper develops a model to analyze the welfare effect of immigration on the outcome of a majority vote among natives on both the composition of public spending and the quota of unskilled immigration. Public spending can be of two types, spending on rival goods (social transfers) and non-rival goods (public goods). I provide a theoretical framework that is consistent with the perception of the welfare effect of immigration at the individual level, which posits that welfare-dependent natives are more averse to immigration, and with macro-level evidence that countries with more generous welfare policies exhibit less restrictive views on immigration, in line with the compensation hypothesis. In particular, I derive the following equilibrium conditions : I find that an equilibrium with positive immigration is possible under some conditions on the size of the unskilled native majority and the level of redistribution in the host country, when social transfers are high enough with respect to low-skill natives labour income. I also provide some empirical support for the predictions of the model in OECD countries.
