Migration and inequality: Evidence from Eastern European Countries

The relationship between globalization and income inequality has been widely studied, particularly in terms of the effects on income distribution of increasing trade and FDI openness. Much less is known about the impact of international migration and the few empirical studies that have analysed the effect of international labour mobility on income inequality have found mixed results. In this paper, using a cross-country panel dataset on Eastern European countries over the period 1997-2009, we study the relationship between international migration - measured by remittances - and income inequality in sending countries. In contrast to most of the existing studies, based on household-level data on low income sending countries, we analyse a group of middle income countries using data at the cross-national level. In addition to international labour mobility, we control for the role of other variables of globalization indicated in the literature as possible determinants of income inequality, specifically trade and FDI openness. Our preliminary results seem to show a negligible effect of remittances in explaining income inequality in Eastern European countries. In contrast, the effect of trade openness is significantly positive across all specifications.