Immigration and the distribution of income, consumption and wealth in the euro area: Implications for economic policies

Maarten Dossche, Aleksandra Kolndrekaj, Maximilian Propst, Javier Ramos Perez, Jiri Slacalek and Marton Vegh

Journal of Policy Modeling, 2024, vol. 46, issue 5, 867-886

Abstract: We use representative data from household surveys in the euro area to describe differences in wages, income, consumption, wealth and liquid assets between households born in their country of residence (“natives”) and those born in other EU and non-EU countries (“immigrants”). The differences in wealth and liquid assets are more substantial than the differences in wages, income and consumption: immigrants earn on average about 30% lower wages than natives and hold roughly 60% less net wealth. For all variables, only a small fraction of differences between natives and immigrants—around 30%—can be explained by differences in demographics (age, gender, marital status, education, occupation, sector of employment). Immigrants are more likely to be liquidity constrained: while we classify 17% of natives as “hand-to-mouth” (they hold liquid assets worth less than two weeks of their income), the corresponding share is 20% for households born in another EU country and 29% for those born outside the EU. Employment rates of immigrants are substantially more sensitive to fluctuations in aggregate employment. We discuss the implications of these findings for economic policies, including monetary, fiscal and pre-distribution policies.

Keywords: Migration; Inequality; Distribution of income and wealth (search for similar items in EconPapers)
JEL-codes: D31 E21 E24 J15 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:46:y:2024:i:5:p:867-886

DOI: 10.1016/j.jpolmod.2024.02.005

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