Many countries experience a clear and distinct prosperity gap between urban and rural dwellers. A recent Norwegian study suggests that much of the inequality in Norway is caused by immigrants from the Accession 8 countries that joined the EU in 2004.
“When the EU expanded eastwards, Norway had historically high labor migration. What was also new was that immigrants to a large extent settled in rural areas,” the researcher says.
Income inequality
The researcher wanted to explore any connection between immigration and income inequality since 2004. The author suggests that many municipalities had little experience with labor migration at that time, but subsequently took in a relatively high number of people.
It is relatively well established that the movement of people causes a short-term rise in income inequality, as newcomers typically earn less than existing residents. This can be especially so when people come from regions with considerably lower income levels. This general pattern was confirmed in Norway, but the researcher wanted to see if the arrival of new people also affected the income inequality of the rest of the population. Previous work suggests that some gain while others lose out.
“The question I asked was whether this immigration also affects the income of Norwegian-born people,” the author explains. “The income differences in the Norwegian-born population increased as a result of labor migration, but only in rural municipalities. The effect is present, but perhaps a little weaker than some people had feared.”
Different roles
Immigration is not the sole reason for these disparities, of course. The author highlights that immigrants often take very different roles than the native population, with industries such as construction and fishing particularly common. Their arrival in these sectors does little to affect the wages of native workers in them.
“The labor migrants come and take jobs that Norwegians no longer want, for example in the fishing industry, which I investigated in this study,” the author explains. “In recent decades, we’ve seen an educational revolution and strong wage growth. Certain jobs are therefore no longer attractive to Norwegians.”
This has helped to play a role in the generally low-skilled, low-wage work done by immigrants in Norway, with natives overrepresented in high-income jobs, and migrants overrepresented in lower-income jobs. For instance, migrant workers make up the majority of employees doing manual work in the fishing industry.
“Norwegians leave the industry much more often for better jobs or for better jobs within the industry. They have upward mobility and haven’t been pushed out. The majority of Norwegians have done well, and have fared the best when compared to labor migrants. Labor migrants tend to stay in the industry’s manual jobs,” the researcher explains.
Lack of opportunities
There were particularly few opportunities for immigrants from non-Western countries. The data suggests that it’s sadly more likely that they will end up outside of the labor market rather than moving up it. The author argues this is due to the small connection to the country and the poor opportunities for upward mobility this creates.
“One question that we don’t answer in our research is whether immigrants from outside Europe have been very negatively affected by the migrant influx following the enlargement of the EU in 2004. But a lot of indications suggest that if anyone is paying the price for the large labor force supply in the labor market, this group would be it,” the author concludes.
