The impact of internal migration on regional income inequality of
the receiving areas has hitherto gone largely unstudied. This dearth
of literature is especially surprising because income inequality and inmigration
into urban centres of growth are two issues that many developing
economies are faced with and tackling these issues effectively
involves understanding the interactions between these two related phenomena.
This study is therefore a first attempt to analyse the impact
of internal in-migration on receiving areas and is placed in the context
of South Africa. Based on a conceptual analysis the study argues that
In-migration into formal sector of the receiving areas will in general reduce
inequality while in-migration into informal or unemployed sector
increases inequality. Using individual panel data the study further tests
empirically at the district level the impact of in-migration and finds that
rising urban inequality in the urban areas can be attributed at least in
part to rural-urban migration. This works through both the wage as well
as employment channel. The employment channel can be said to have
a stronger impact than the wage channel as indicated by the coefficients
estimated through our system GMM regression analysis.