Immigration and the Distribution of Incomes

No 6921, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We review research on the impact of immigration on income distribution. We discuss routes through which immigration can affect income distribution in the host and source countries, including compositional effects and effects on native incomes. Immigration may affect the composition of skills among the residents of a country. Moreover, immigrants can, by changing relative factor supplies, affect native wage and employment rates and the return to capital. We then provide evidence on the level and recent increases in immigration to OECD countries and on the distribution of native and immigrant educational attainment. We next provide a decomposition of 1979-2009 changes in US wage inequality, highlighting the effects of immigration on workforce composition. We then consider the economic theory of the impact of immigration on income distribution, emphasizing labor market substitution and complementarity between natives and immigrants. Further, by changing job opportunities or child care availability, immigrants can affect family, as well as individual, income distribution. We review research methodologies used to estimate the impact of immigration on the native income distribution. These include the structural approach (estimating substitution and complementarity among factors of production, including capital and labor force groups) as well as the natural experiment approach (seeking exogenous sources of variation in immigration) to studying the labor market. We then discuss evidence on these questions for Austria, Britain, France, Germany, Hong Kong, Israel, Portugal, Spain and the United States, as well as the impact of emigration on source country income distribution.

Keywords: international migration; factor income distribution (search for similar items in EconPapers)
JEL-codes: D33 J61 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2012-10
New Economics Papers: this item is included in nep-ltv and nep-mig
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Published - published in: Barry Chiswick and Paul Miller (eds.): Handbook on the Economics of International Migration, 1B, 2014

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Related works:
Working Paper: Immigration and the Distribution of Incomes (2013)
Working Paper: Immigration and the Distribution of Incomes (2012)
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