Ratio Working Papers
Migration and Increasing Wage Inequality: Can Imperfect Competition Explain the Link?
Abstract: In this paper, we test two hypotheses as regarding
potential effects of domestic and international migration on wage
inequality. One related to the possibility of wage competition, and another
alternative hypothesis related to fixed set-up costs and indivisibilities
for different types of industries within the local labour market. Using
detailed information on Swedish local labour markets, derived from Swedish
full population data, for 1993 and 2003, a panel model of percent changes
in inequality is estimated. Thereby controlling for local level fixed
effects as well as other competing explanations, the results suggest that
positive net migration may affect income dispersion regardless of possible
negative wage competition.
Keywords: Income inequality; local labour markets; business diversification; international migration; (follow links to similar papers)
JEL-Codes: D61; F22; J31; J40; R12; (follow links to similar papers)
37 pages, September 24, 2013
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