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Immigration and the Distribution of Incomes

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  • Blau, Francine D.

    (Cornell University)

  • Kahn, Lawrence M.

    (Cornell University)

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.

Suggested Citation

  • Blau, Francine D. & Kahn, Lawrence M., 2012. "Immigration and the Distribution of Incomes," IZA Discussion Papers 6921, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6921
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    6. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    7. Alimi, Omoniyi & Maré, David C. & Poot, Jacques, 2018. "International Migration and the Distribution of Income in New Zealand Metropolitan and Non-Metropolitan Areas," IZA Discussion Papers 11959, Institute of Labor Economics (IZA).
    8. Fiaschi, Davide & Tealdi, Cristina, 2020. "Winners and Losers of Immigration," IZA Discussion Papers 13600, Institute of Labor Economics (IZA).
    9. Naudé, Wim & Nagler, Paula, 2017. "Technological Innovation and Inclusive Growth in Germany," IZA Discussion Papers 11194, Institute of Labor Economics (IZA).
    10. Mette Foged & Giovanni Peri, 2013. "Immigrants' and Native Workers: New Analysis on Longitudinal Data," NBER Working Papers 19315, National Bureau of Economic Research, Inc.
    11. Christoph Basten & Michael Siegenthaler, 2013. "Do immigrants take or create residents' jobs?," KOF Working papers 13-335, KOF Swiss Economic Institute, ETH Zurich.
    12. Ted Mouw, 2016. "The Impact of Immigration on the Labor Market Outcomes of Native Workers: Evidence using Longitudinal Data from the LEHD," Working Papers 16-56, Center for Economic Studies, U.S. Census Bureau.
    13. Uri Dadush, 2015. "Diaspora, Development and Morocco," Research papers & Policy papers 1518, Policy Center for the New South.
    14. Chung Choe & Philippe Van Kerm, 2018. "Foreign Workers and the Wage Distribution: What Does the Influence Function Reveal?," Econometrics, MDPI, vol. 6(3), pages 1-26, September.
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    16. Giovanni Peri, 2014. "Do immigrant workers depress the wages of native workers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-42, May.
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    19. Siegenthaler, Michael & Basten, Christoph, 2013. "Do immigrants take or create residents jobs? Quasi-experimental evidence from Switzerland," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79780, Verein für Socialpolitik / German Economic Association.
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    More about this item

    Keywords

    international migration; factor income distribution;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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