IMMIGRATION, POPULATION HETEROGENEITY, AND EARNINGS INEQUALITY IN HONG KONG
This paper analyzes the heterogeneity effect of immigration on earnings in-equality by decomposing the aggregate measure of total inequality. The analysis shows that a substantial portion of an increase in measured inequality could be due to shifts in shares of heterogeneous population groups caused by immigration policy rather than by widening earnings dispersion within these groups. The analysis is illustrated with census data of Hong Kong from 1981 to 1991. Income redistribution policy based on measured total inequality when there are shifts in population shares could be misguided. Copyright 1998 Western Economic Association International.
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