Immigration and the Distribution of Incomes

68 Pages Posted: 20 Oct 2012

See all articles by Francine D. Blau

Francine D. Blau

Cornell University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics; German Institute for Economic Research (DIW Berlin)

Lawrence M. Kahn

Cornell University - School of Industrial and Labor Relations; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Multiple version iconThere are 3 versions of this paper

Date Written: October 20, 2012

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

JEL Classification: D33, J61

Suggested Citation

Blau, Francine D. and Kahn, Lawrence M., Immigration and the Distribution of Incomes (October 20, 2012). IZA Discussion Paper No. 6921. Available at SSRN: https://ssrn.com/abstract=2164650

Francine D. Blau (Contact Author)

Cornell University - Department of Economics ( email )

265 Ives Hall
Ithaca, NY 14853-3901
United States
607-255-4381 (Phone)
607-255-4496 (Fax)

HOME PAGE: http://www.ilr.cornell.edu/directory/fdb4/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

German Institute for Economic Research (DIW Berlin) ( email )

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Berlin, 10117
Germany

Lawrence M. Kahn

Cornell University - School of Industrial and Labor Relations ( email )

265 Ives Hall
Ithaca, NY 14853-3901
United States
607-255-0510 (Phone)
607-255-4496 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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