Labour migration and increasing inequality in Norway

This paper explores the contested relationship between migration and income inequality, using labour migration to Norway as a case. The enlargements of the European Union starting in 2004 were followed by an unprecedented increase in labour migration to Norway. In particular, many rural regions, previously unfamiliar with immigration, have experienced a large influx of labour migrants. In the same period, income inequality has increased. This paper uses register data on the municipality level from 2005–2016 to discuss (a) the direction of the relationship between labour migration and income inequality; (b) the degree to which labour migration affects inequality (in general and within the native population) compared to other immigrant groups; and (c) whether the effects are different in rural and urban municipalities. Findings show that labour migration from the ‘new’ European Union countries is followed by higher income inequality in Norway. No support is found for the reversed causal relationship that increasing inequality causes higher numbers of labour migrants. The effect of labour migration on overall inequality is considerable, but not as strong as the effect of refugees. However, as opposed to refugees, labour migration also affects income inequality within the native population, but this effect is only significant in rural areas.