Geoscience Reference
In-Depth Information
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
0.0%
0.6%
1.2%
1.5%
Fig. 11.12
Immigration impacts on income distribution: Gini coefficients for Chicago
changes insignificantly because the additional working-age immigrants in Chicago
region are not of a large enough size to decrease the tax rate that is influenced by
changes in the national population. Therefore, locally increased immigration may
only hurt the local labor market without generating additional tax benefits. This is
an important point; local autonomy in the case of a small region has limited impact
of national policy that in turn could affect the outcome in Chicago.
Figure
11.12
present the effects of immigration on income distribution; immi-
gration turns out to have a negative impact on equality in terms of income
distribution, i.e., the income Gini coefficient becomes larger as more immigrants
are admitted. There are two reasons for this. First, younger, lower income groups
substantially rely on labor income, while middle-aged populations earn larger
incomes from both asset holdings and labor earnings. Thus, the younger
populations become relatively poorer as more immigrants decrease wage income,
whereas rich middle-aged populations are not much affected by the immigration
because they earn large capital income thanks to the increases in the interest rate.
The second reason is closely related to the change in the demographic structure
associated with immigration. Before the first immigrants start to retire around
2040s, the share of the population with larger income increases relatively faster
than the younger and older poor populations because more immigrants acquire
higher skills and become richer. This structural change in population increases the
aggregate income gap between middle-aged richer population and poor young and
old populations. However, after 2040s, since wages start to increase and immigrants
start to retire, the Gini coefficients in all immigration scenarios starts to fall.
In contrast to the income distribution effect, immigration improves the equality
of asset distribution until the mid 2030s, i.e., the asset Gini coefficient falls.
However, the effect of immigration on asset distribution is reversed during the
subsequent period. Basically, immigration has an upward pressure on asset Gini
coefficient since it increases the asset holdings of the wealthiest group without
significant changes in asset holdings of younger generations who face liquidity
