Immigration reduces inequality, fresh study by SPP researchers shows

January 13, 2021
SPP's professor Martin Kahanec, PhD alumna Magdalena Ulceluse (University of Groningen), and former visiting professor Martin Guzi (Masaryk University) publish a chapter on "Europe's migration experience and its effects on economic inequality" in Oxford University Press book Europe's Income, Wealth, Consumption, and Inequality edited by Georg Fischer and Robert Strauss.
The chapter provides the historical context for the past half-century in Europe focusing specifically on the link between migration and economic development and inequality. The literature suggests that there are several channels through which migration affects economic inequality between countries in one or the other direction, and may decrease inequality within countries. The net effects are an open empirical question and are likely to depend on the economic, demographic and institutional and policy contexts; sources, types and selectivity of migration; as well as responses of the receiving societies and migrants themselves.
The authors undertake an empirical analysis and find that immigration has contributed to reducing inequality within the 25 EU countries over the 2003-2017 period. As the EU attracted relatively highly qualified immigrants throughout this period, their results are consistent with the ameliorating effect of skilled migration on within-country inequality, as predicted by theory.
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