Immigration and Inequality: Evidence from Sweden

Abstract: I empirically study the relationship between the share of foreign-born individuals and municipality income inequality measured by the Gini index. I use Swedish municipality level data from 2000 to 2019, showing a positive and signi cant relationship between the municipality level inequality and the share of foreign-born individuals. As predicted by existing theory, my results seem to be driven mainly by the share of immigrants more likely to be born in countries with lower human capital. These results motivate policy interventions to increase human capital levels for such foreign-born at their point of arrival. My results are robust to various speci cations, including fi xed effects models and various ways of de ning municipality level inequality.