This chapter provides the historical context for the past half-century in Europe focusing specifically on the link between migration and economic development and inequality. The literature review suggests that there are several channels through which migration affects economic inequality between countries in one or the other direction, and may decrease inequality within countries. The net effects are an open empirical question and are likely to depend on the institutional and policy context, sources and destinations of migration, and its type. We undertake an empirical analysis and find that immigration has contributed to reducing inequality within the 25 EU countries over the 2003-2017 period. As the EU has attracted mostly high-skilled immigrants throughout this period, our results are consistent with the ameliorating effect of high-skilled migration on within-country inequality, as predicted by theory.

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