Working Paper: CEPR ID: DP6899
Authors: Martin Kahanec; Klaus F. Zimmermann
Abstract: Mobility of workers involves flows of labour, human capital and other production factors and thus contributes to a more efficient allocation of resources. Besides these effects on allocative efficiency, migrant flows affect relative wages and also change the international and national distribution of skills and thereby equality in the receiving society. This paper suggests that skilled immigration promotes economic equality in advanced economies under standard conditions. The context is theoretically explained in a core model and empirically documented using unique data from the WIID database and OECD.
Keywords: ethnicity; gini coefficient; human capital; income distribution; inequality; migration; minority; skill allocation
JEL Codes: D33; E25; F22; J15; J61; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| skilled immigration (J61) | decrease in economic inequality (F62) |
| increase in share of skilled workers (J24) | decrease in wage differential between high-skilled and low-skilled labor (F66) |
| decrease in wage differential between high-skilled and low-skilled labor (F66) | decrease in economic inequality (F62) |
| unskilled immigration (K37) | increase in economic inequality (D31) |
| inflow of higher-skilled immigrants (J61) | decrease in economic inequality (F62) |
| low-skilled immigration (K37) | increase in economic inequality (D31) |
| share of foreigners in labor force (F22) | increase in labor force quality (J24) |
| labor force quality (J24) | decrease in economic inequality (F62) |