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To what extent does immigration affect inequality?

Berman, Y; Aste, T; (2016) To what extent does immigration affect inequality? Physica A: Statistical Mechanics and its Applications , 462 pp. 1029-1039. 10.1016/j.physa.2016.06.074. Green open access

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Abstract

The current surge in income and wealth inequality in most western countries, along with the continuous immigration to those countries demand a quantitative analysis of the effect immigration has on economic inequality. This paper presents a quantitative analysis framework providing a way to calculate this effect. It shows that in most cases, the effect of immigration on wealth and income inequality is limited, mainly due to the relative small scale of immigration waves. For a large scale flow of immigrants, such as the immigration to the US, the UK and Australia in the past few decades, we estimate that 10%÷15% of the wealth and income inequality increase can be attributed to immigration. The results demonstrate that immigration could possibly decrease inequality substantially, if the characteristics of the immigrants resemble the characteristics of the destination middle class population in terms of wealth or income. We empirically found that the simple linear relation ΔS=0.18ρ roughly describes the increase in the wealth share of the top 10% due to immigration of a fraction ρ of the population.

Type: Article
Title: To what extent does immigration affect inequality?
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.physa.2016.06.074
Publisher version: http://dx.doi.org/10.1016/j.physa.2016.06.074
Language: English
Additional information: Copyright © 2016 Elsevier B.V. All rights reserved. This manuscript version is made available under the CC-BY-NC-ND 4.0 license (http://creativecommons.org/licenses/by-nc-nd/4.0/). The published version of record is available at http://dx.doi.org/10.1016/j.physa.2016.06.074
Keywords: Econophysics; Wealth inequality; Income inequality; Immigration
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Dept of Computer Science
URI: https://discovery.ucl.ac.uk/id/eprint/1502284
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