The Impact of Migration on Earnings Inequality in New England
Migration plays an important role in the New England economy; absent immigration, the region’s population and workforce would have shrunk in recent years. Yet increasingly, immigrant inflows have been met with legislative opposition at both the national and regional levels, motivated in part by concerns that immigration may be an important factor driving the marked rise in earnings inequality. The research findings presented in this report, however, indicate that immigration accounts for a very small portion—only 6.0 percent—of the rising income inequality that the region has experienced. These results suggest that policymakers interested in responding to increased inequality should pursue avenues other than immigration reform.
Among the key conclusions in this report is the finding that income inequality in New England increased by 52.8 percent over the 1950–2015 period, with Connecticut and Massachusetts leading the region in terms of earnings inequality. Regional growth in earnings inequality closely tracks the national average, as do migration flows, although New England experiences higher rates of immigration than the United States as a whole.
Analyzing the causal impact of migration on income inequality, the report shows that domestic migration between states does not have any statistically detectible effect on earnings inequality. International migration is found to contribute only 6.0 percent of the observed rise in earnings inequality in New England. Most of that contribution is due to changes in the earnings of non-migrants in the labor force that may arise for various reasons, such as coordination between migrants and non-migrants that increases the work productivity of non-migrants.
Public policies that seek to restrict immigration will likely have only a limited impact on earnings inequality. However, restricting immigration may undermine economic growth in New England. Policymakers concerned with earnings inequality should explore other approaches, such as building the skills of low-paid workers and increasing educational opportunities for people from low-income families.
The analysis and findings featured in this research report are derived from a technical working paper: “The Impact of Migration on Earnings Inequality.” Research Department Working Paper No. 19–5.