Does Migration Cause Income Inequality?

Authors

Pia M. Orrenius, Federal Reserve Bank of Dallas
Madeline Zavodny, University of North Florida

Publication Date

5-2018

Abstract

Inequality has been rising across the world in recent decades. Latin America has been an exception to what otherwise seems to be the prevalent trend in the U.S., Europe and Asia. In the U.S. the rise in inequality since the 1970s has coincided with the rise in Mexican immigration. In Mexico, inequality has been declining since the mid-1990s, a period during which emigration to the U.S. first increased to historic highs and then declined steeply.

Our review of the literature suggests that low-skilled immigration to the U.S., much of it from Mexico, has only played a minor role in rising income and wage inequality. To the extent that there is an effect, it has come through the presence of immigrants, and less as a result of immigration’s effect on natives’ wages. Immigrants’ bimodal skill distribution, with clustering at the top and bottom of the U.S. skill distribution, has widened the overall income distribution slightly.

At the same time, low-skilled immigration to the U.S. and migrants’ remittances have played a large role in lowering global inequality by moving millions of low-income Mexican families further away from poverty and closer to the global middle class. Migration also has broader economic benefits in the destination for employers and consumers, especially in light of the aging of the U.S. workforce and rising labor force needs. Hence, our policy recommendations include boosting legal employment-based migration from Mexico to the U.S. We also suggest a host of other initiatives that can decrease inequality, such as increasing education outcomes, workforce training and access to credit.

Document Type

Article

Keywords

Migration and income inequality, U.S.-Mexico migration, Mexican wage growth, Mexico income inequality, US income inequality

Disciplines

Income Distribution | Inequality and Stratification | International and Comparative Labor Relations | Labor Economics | Political Economy | Public Policy | Regional Economics

Part of

Notas Sobre Migración y Desigualdades

Publisher

Seminario Migración, Desigualdad y Políticas Públicas, El Colegio de México

Acknowledgements

This research was funded by the SMU Mission Foods Texas-México Center. Claudia Masferrer edited the series.

Recommended Citation

Orrenius, Pia M. and Zavodny, Madeline, "Does Migration Cause Income Inequality?" (2018). Mission Foods Texas-Mexico Center Research. 1.
https://scholar.smu.edu/texasmexico-research/1