Immigration and the Distribution of Incomes

Research, Preprint OPEN
Francine D. Blau ; Lawrence Kahn (2013)
  • Publisher: Center for Economic Studies and Ifo Institute (CESifo) Munich
  • Subject: Frankreich | USA | J61 | Verteilungswirkung | Deutschland | D33 | Großbritannien | Portugal | factor income distribution | Funktionelle Einkommensverteilung | Israel | Österreich | international migration | Beschäftigungseffekt | Einwanderung | OECD-Staaten | Hongkong | Spanien | international migration, factor income distribution | Internationale Wanderung
    • jel: jel:D33 | jel:J61 | jel:J3
      ddc: ddc:330

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.
  • References (24)
    24 references, page 1 of 3

    Table 1: Percent Foreign-Born Population, OECD Countries, 1988-1991 and 2000-2001

    1988-1991 2000-2001 Absolute Change Relative Change Source: OECD (2008, pp. 82-3).

    Figures refer to 2001 except as follows: Denmark and Ireland (2002); Switzerland, Finland, Japan, Mexico, Turkey, and the United States (2000); Norway and Sweden (2003); France (1999); Germany (1998-2002, 2005); the Netherlands (1998-2002). See OECD (2008, p. 192).

    Base: 1980 shares, 2010 variances Base: 2010 shares, 1980 variances and means and means Acemoglu, D. (1998). “Why do new technologies complement skills? Directed technical change and wage inequality”. Quarterly Journal of Economics 113, 1055-1089.

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    Altonji, J. G., Card, D. (1991). “The effect of immigration on the labor market outcomes of less-skilled natives”. In Abowd, J. M., Freeman, R. B. (Eds.). Immigration, Trade and the Labor Market. University of Chicago Press, Chicago.

    Angrist, J. D., Kugler, A. D. (2003). “Protective or counter-productive? Labour market institutions and the effect of immigration on EU natives”. Economic Journal 113, F302- F331.

    Ashenfelter, O., Card, D. (1999). Handbook of Labor Economics, Volume 3. North-Holland, Amsterdam.

    Aydemir, A., Borjas, G. J. (2011). “Attenuation bias in measuring the wage impact of immigration”. Journal of Labor Economics 29, 69-113.

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