How Migration Contributes to Inequality: An In-Depth Analysis

Migration is rarely just about geography. When a construction worker boards a train from Araria in Bihar to Mumbai, or when a software engineer from Bengaluru relocates to San Francisco, the same underlying force is at work: the search for a better deal. That deal, however, looks very different depending on who is moving, why they are moving, and what resources they carry with them. Migration both reflects existing inequalities and quietly reshapes them, sometimes narrowing the gap, often widening it.

The two-way street between migration and inequality 🔗

Economists and demographers describe the relationship between migration and inequality as bidirectional. Inequality pushes people to move, and movement, in turn, redistributes wealth, skills, and opportunity in ways that can either reduce or deepen the original gaps. Research on inter-state migration in India describes migration as a natural outcome of the unequal distribution of resources, closely tied to modernisation, industrialisation, and development.

This makes migration an unusually revealing lens. The direction of migrant flows, who moves and who stays, and where remittances eventually land tell us a great deal about the structure of an economy. The flows from Uttar Pradesh, Bihar, Rajasthan, and Odisha toward Maharashtra, Delhi, Tamil Nadu, and Gujarat are not random. They map almost perfectly onto the country’s economic geography.

Inequality as a driver of migration 🔗

The most basic reason people migrate is that wages, jobs, and living standards are not evenly distributed. When opportunities cluster in some places and not others, people follow them.

Wage gaps and labour market opportunities 🔗

According to the IZA World of Labor, income levels and income inequality both function as push and pull factors, with countries showing high inequality often producing large gaps between wages for high-skilled and low-skilled workers. The same logic applies within a country. A daily wage labourer in rural Bihar often earns a fraction of what an equivalent worker earns on a construction site in Pune. That wage differential alone is enough to set millions of people in motion every year.

The 2011 Census recorded nearly 450 million internal migrants in India, roughly 37% of the population, with the dominant streams flowing from agrarian, low-income states to industrial and service-sector hubs. This is inequality in motion.

Relative deprivation, not just absolute poverty 🔗

Migration is not simply about being poor. It is often about being poor next to someone visibly richer. The IZA review notes the often-cited insight that there is a higher incentive to migrate if one is poor among the rich than if one is poor among the poor. This explains why migration intensifies as television, smartphones, and social networks expose villagers to the lifestyles of urban India and the Gulf. Inequality becomes more visible, and movement becomes more attractive.

Global inequalities and international migration 🔗

At the international scale, the same logic plays out across borders. A standard economic model suggests that if individuals move to where their marginal product is highest, average wages across countries should eventually equalise. In reality, restrictions on movement, family ties, and the cost of migrating keep most people in place. But for those who can move, the financial returns can be life-changing. India’s largely Gulf-bound workforce illustrates this clearly, with the country receiving around US$107.5 billion in remittances in 2022-23, making it the largest single recipient of remittances in the world.

Migration as an equalising force 🔗

For all the concerns about inequality, migration genuinely does help many people. When workers from poorer regions access better-paying jobs elsewhere, both the migrants and their families benefit. Remittances cushion household budgets, fund children’s education, pay off debts, and finance small assets like a pump set or a sewing machine.

Kerala is the textbook case. A long-running study on the state’s Gulf migration found that close to 19% of remittances accrued to households in the bottom four consumption deciles according to the 64th Round of the National Sample Survey, suggesting that even relatively poor households received meaningful direct transfers from migrants abroad. International remittances have also lifted Kerala’s consumption, housing quality, and access to private healthcare and education in ways that older fiscal transfers from the central government could not.

Internal migration plays a similar redistributive role within India. Workers from low-income states sending money home through digital wallets, post offices, or informal hawala-like channels move a substantial volume of resources from richer states to poorer ones every year. A government-commissioned study on Odisha highlighted that remittances eased credit constraints for migrant households and improved access to health, education, and housing.

How migration can deepen inequality 🔗

Migration’s equalising potential is real but partial. Several mechanisms ensure that the benefits are unevenly distributed and that, in many cases, migration ends up widening the very gaps it was supposed to close.

Migrant selectivity: who actually gets to move 🔗

Migration is never a random draw of the population. As an LSE Inequalities analysis points out, migrants tend to be selected – better educated, healthier, more resourced, and with characteristics that make them more “productive”. The poorest of the poor often cannot migrate at all. They lack the upfront cash to pay for tickets, agents, deposits, and the weeks of unpaid time it takes to find work in a new city.

This selectivity is consequential. An evidence review on remittance patterns notes that states with low average education and skill levels – Odisha, Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh – barely feature in international migration, while richer states like Kerala, Punjab, Tamil Nadu, and Gujarat dominate the flows abroad. The result is that international remittances tend to accentuate regional inequality, because the better-off states are the ones sending more workers overseas in the first place.

Brain drain and the loss of human capital 🔗

When the most educated and entrepreneurial leave, the sending region loses more than just people. The departure of doctors, engineers, and skilled professionals from smaller towns to metros – or from India to the United States – represents a transfer of human capital from places that invested in their education to places that reap their productivity. The LSE analysis describes this phenomenon clearly in the case of IT specialists moving from India to the United States, where origin countries lose skilled workers while destination countries pick the brightest from a global marketplace for talent.

Uneven access to remittances 🔗

Within communities, remittances tend to flow only to households with a migrant member. Families without that connection are left behind in relative terms. A review of Kerala’s migration-led development argues that the differential access to remittances has contributed to growing inequality in the state, with marginalised groups remaining excluded even as overall prosperity rises. The UN World Social Report 2020 further notes that wealthier and more skilled migrants remit less often but in larger amounts, while poorer households face disproportionately high transaction costs when sending money home.

New urban inequalities at the destination 🔗

Migration also reshapes inequality at the receiving end. Cities like Mumbai, Delhi, and Bengaluru host both highly paid professionals and low-wage informal workers, often migrants themselves. The result is an urban landscape sharply divided between gated condominiums and informal settlements without secure water, sanitation, or housing rights. A SpringerLink study on internal migration, urbanisation, poverty, and inequality in India found that the urban Gini index rose by nearly 5 points between the late 2000s and the early 2010s, with unplanned urban population growth pressing on regional and urban disparities and feeding the rapid expansion of slum populations.

Polarisation in destination labour markets 🔗

Destination economies experience a peculiar bunching. Migrants tend to cluster at both ends of the income distribution – some pulled into low-reward niche sectors with weak labour protections, others recruited into high-paying tech, finance, or medical jobs. This bimodal pattern stretches the wage distribution and contributes to greater within-country inequality at the destination, even when migration is, on average, beneficial for migrants themselves.

The Indian policy landscape 🔗

Recognising these tensions, the Government of India has taken steps to make migration safer and more equitable. Initiatives like the eMigrate online system and the Pravasi Bharatiya Bima Yojana aim to formalise overseas recruitment and provide insurance cover to migrant workers. Domestically, the One Nation One Ration Card scheme attempts to make food entitlements portable across states for internal migrants, partially correcting one of the long-standing structural disadvantages they have faced.

These measures, while important, leave large gaps. The most vulnerable internal migrants – seasonal workers in construction, brick kilns, agriculture, and domestic work – still struggle to access social protection, secure housing, and basic healthcare in the cities where they live and work. Until those gaps close, migration will continue to be a deeply uneven bargain.

What this means for the Sustainable Development Goals 🔗

SDG 10 aims to reduce inequality within and between countries, and target 10.7 specifically calls for facilitating orderly, safe, regular, and responsible migration. The Indian experience shows why these targets matter so much. Migration is one of the few mechanisms through which large amounts of wealth move from richer regions and countries to poorer ones, and one of the few that millions of households actively use to improve their lives. But the same flows can reinforce hierarchies of caste, class, gender, and geography if left unmanaged.

Designing policies that help the poorest migrate, lower remittance costs, protect labour rights at destinations, and invest in lagging regions of origin is not just a matter of fairness. It is the difference between migration that closes the gap and migration that quietly widens it.

What do you think? If migration tends to favour those who already have some resources to move, what kinds of public investments in education, transport, or social protection could make migration a more equalising force? And in your own community, do you see migration narrowing the gap between households – or pulling them further apart?

References

1. https://iussp.org/sites/default/files/event_call_for_papers/Inter-state%20migration_IUSSP13.pdf
2. https://wol.iza.org/articles/demographic-and-economic-determinants-of-migration/long
3. https://www.nimbusias.com/internal-migration-in-india-patterns-causes-and-impacts/
4. https://academic.oup.com/ooec/article/3/Supplement_1/i453/7708103
5. https://en.wikipedia.org/wiki/Remittances_to_India
6. https://pmc.ncbi.nlm.nih.gov/articles/PMC7571534/
7. https://mospi.gov.in/sites/default/files/publication_reports/Report_The_Impact_of_Remittance.pdf
8. https://blogs.lse.ac.uk/inequalities/2024/07/02/does-migration-reduce-inequality/
9. https://gipe.ac.in/migration-led-development-in-kerala-looking-beyond-growth-and-remittances/
10. https://www.un.org/development/desa/dspd/wp-content/uploads/sites/22/2020/01/WSR2020-Executive-Summary.pdf
11. https://link.springer.com/chapter/10.1007/978-981-13-1537-4_5
12. https://www.cdpp.co.in/articles/migration-and-economic-inequality-in-india-insights-into-sdg-10-7