1. Introduction

Migration has been a transformative force for a long period affecting economies and social life at the same time increasing the existing economic disparities. Defined as the movement of individuals across borders in search of better opportunities, migration influences economic inequality in both sending and receiving countries [1]. This changing relationship is challenging since migration tends to reduce poverty in sending countries through remittances, and on the other hand it increases disparities due to brain drain and unequal access to migration opportunities. In receiving countries, migration leads to economic growth by filling labour shortages and increase wage gaps and increase strain on public services when it is not managed [2]. Migration therefore both alleviates and worsens economic inequality in sending and receiving countries, depending on factors such as remittance flows, policy frameworks, and structural inequalities. In the work postulated by Kamau [3], the need to understanddual impact is key to developing policies that maximize migration's benefits at the same time addressing these challenges. This essay therefore focuses on assessing how migration affects economic inequality in sending and receiving countries. It first demonstrates the positive and negative effects of migration on inequality in sending countries, with case studies of the Philippines and Mexico. The focus then shifts to receiving countries, analysing how migration influences labour markets and social equity in Germany and the United States.

2. Migration and Economic Inequality in Sending Countries

2.1. Remittances and Poverty Reduction

Migration impacts sending countries through remittances, a key financial inflow often exceeding foreign direct investment. In 2022, global remittance flows to low- and middle-income countries reached $626 billion, playing a vital role in poverty alleviation and economic stability by supporting health, education, and housing. However, challenges such as dependency and unequal access limit their full impact.

The Philippines exemplifies the transformative power of remittances, which accounted for 9% of its GDP in 2022. These funds improve rural livelihoods, helping families invest in education, healthcare, and living standards while stimulating local economies. Remittances also promote intergenerational mobility by increasing access to private schooling. Studies support this trend: Nahar and Arshad [4] found remittances in Indonesia help households weather financial shocks, while Ewubare and Okpoi [5] noted their role in mitigating poverty in Nigeria, particularly in regions with limited financial services.

Despite benefits, remittances can foster dependency, discouraging productive activities and local job creation. Families reliant on remittances may prioritize consumption over entrepreneurship, increasing vulnerability to external shocks like economic downturns and immigration policy changes. Unequal access further limits benefits to wealthier individuals, as high migration costs exclude the poorest, particularly in Sub-Saharan Africa.

The effectiveness of remittances also depends on financial development. Inoue [6] found strong financial systems channel remittances into productive investments, enhancing access to credit for business and infrastructure. In weaker systems, funds are often spent on immediate consumption, reducing long-term poverty reduction and economic growth potential.

2.2. Brain Drain and Skill Gaps

Brain drain, or skilled human capital flight, significantly impacts sending nations by widening economic disparity and weakening core sectors. While migration generates remittances that help reduce poverty, the loss of professionals in health, education, and IT hinders long-term development.

Mexico illustrates this dual impact. In 2022, it received $58 billion in remittances, benefiting household incomes. However, emigration of skilled workers has led to shortages in key sectors, particularly healthcare and education, where public services struggle to meet demand. These gaps disproportionately affect low-income populations, reinforcing poverty and inequality.

Structural barriers determine migration accessibility, favoring the wealthy through scholarships, sponsorships, and professional networks. Meanwhile, the poor face high visa costs, lack information, and resort to risky migration methods, exacerbating inequality. Docquier [7] argues that losing skilled workers weakens institutions, reduces tax revenues, and limits social development. Docquier and Rapoport [8] highlight how globalization has intensified brain drain, widening the gap between rich and poor nations.

Some scholars view brain drain as an opportunity. Sager [9] suggests that migration enables skill development abroad, with return migration and diaspora networks fostering knowledge transfer, technology exchange, and investment. Cattaneo [10] emphasizes incentives like better wages, working conditions, and career growth to retain or attract skilled workers. Countries addressing systemic issues such as corruption and instability are better positioned to mitigate the brain drain’s negative effects.

3. Migration and Economic Inequality in Receiving Countries

3.1. Labor Market Dynamics

Migration influences labor markets in receiving countries, addressing labor shortages while also contributing to economic inequality. Migrants often take low-wage jobs that domestic workers avoid, such as those in agriculture, construction, and domestic services. While this workforce sustains economic productivity, it can also suppress wages, intensify job competition, and deepen labor market disparities [11].

Germany demonstrates how strategic policies can shape migration’s impact on inequality. The 2015 refugee crisis led to an influx of migrants, initially straining public services and welfare systems. However, Germany’s integration policies—such as language training, vocational education, and employment programs—facilitated migrant entry into the labor market. These measures helped migrants secure stable jobs, reducing reliance on welfare and narrowing income disparities with native workers. Additionally, linking migrants with industries facing labor shortages not only filled employment gaps but also provided opportunities for social mobility.

Conversely, the U.S. lacks a cohesive immigration policy, resulting in a two-tier labor market, particularly for undocumented workers. Studies show that these immigrants are concentrated in low-paying sectors like agriculture, construction, and hospitality, where they endure poor working conditions, low wages, and lack legal protections. This creates downward pressure on wages for native workers in similar industries and exacerbates labor market disparities. As Borjas [12] notes, this competition heightens social tensions not only among migrants but also between them and native workers, contributing to economic and social divides. Additionally, low-skilled migrants may depress wages for less-educated native workers, they also complement higher-skilled native employees by taking jobs that require manual labor, allowing native workers to specialize in more complex tasks.

Much has already been said about how labour market policies affect migration outcomes. According to Kanas and Steinmetz [13], Germany is an example of how integrated employment policies are required to enhance migrants’ economic performance and ratio. On the other hand, restrictive selective measures such as the one practiced in the United States only reduce the number of legal employment and migration options available to migrants while providing meager legal support.

Migration can also influence economic standing in terms of the effectiveness of redistributive policies at reducing the gap among the high earners. Immigration leads to “imported inequality” in the views of Advani et al. [14]. Telecommunication specialists and IT systems administrators, project and process managers or analysts, and even mid-level financial and business services workers receive higher wages than most other employees in knowledge-intensive sectors, which deepens the wedge between the rich 1% and the basic and service workers. This phenomenon is especially keenly felt in developed nations where the wages for the higher skilled corporate professionals are on the rise dampening the prospects for the low skill workers.

There is, therefore, literature that seeks to understand the correlation between migration and labour market inequality taking into account economic and other social factors. As pointed by Black Natali, and Skinner [15] the attitudes towards the migrants affect the labour policies and gains. In contexts where migrants are considered to be an Economic burden the restriction of policies and discrimination marks the migrants even more as outcasts, thus continuing circulation of the cycle of marginality.

3.2. Social Inequality and Public Perception

Migration affects social justice in the recipient societies in that social exclusion of the migrant population prevails in the societies either through structural-defined avenues or through prejudice. Ms experience is therefore not only determined by the demand and supply forces in the given labour market but also by discrimination policies, social exclusion and perception by the public. They can therefore perpetuate the poverty trap for the migrants while at the same time steering the chances of the full assimilation of the migrant into the host economy thus compounding existing inequalities.

Many factors bring about social injustice, one of the most important of which is the vilification of immigrants via anti-immigrant language. In some European countries political discourses discursively construct migrants as either a drain on resources or threats to the Anglo-Saxon culture, thus propagating xenophobia and exclusionism. The type of stigma that goes along with the diagnosis, and which ultimately negatively impacts the afflicted individuals’ lives, can be seen in limitations involving services such as housing, education, and medical care. For instance, restrictive measures racially discriminating housing policies or some landlords’ discriminative attitudes sub standardly relegate migrants to dismal living standards. Lack of education with quality education widens the cycle of poverty because migrant children are not given chances to learn essential skills for upward social mobility.

Magni [16] said perceived competition increases selective solidarity where indigenous people only provide support to their fellows and not to migrants. This discriminative practice only deepened the marginalization problem, especially when natives’ unfixed property earning status caused them to vent their frustration on migrant groups. This leads to a growing societal divide and weakens the social fabric while, at the same time making integration policies within the structure of economic and social policies much less effective.

The level of economic influence that people have on the migrants is of significant influence. Also, Heizmann and Huth [17] show that in the recession period, these migrants’ negative economic impact perception is more deeply rooted in discriminative attitudes. Such perceptions are manifested in policies that lock out migrants from social welfare entitlements; these policies form a vicious cycle of marginalization. On the other hand, inclusion policies that encourage balance in the distribution of profits which will enhance fair competition between the aliens and the inhabitants of a particular country will help in finding a middle ground in society.

Thus, social inequalities are also compounded by environmental and political properties as far as migrants are concerned. Kuilinski et al., [18] raise awareness by highlighting that the environmental migration due to climate change and resource demand affects marginalized individuals. Environmental migrants have been proven to endure more strains in host countries since displacement is considered an emergency rather than a prospect. Less costly, the ‘reformist’ framing thus denies them the wider structural access points necessary for assimilation and thus perpetuates their Otherness.

The urban settings increase the social challenges that are also affected by migrants. Spilker et al. [19] in their work on attitudes toward environmental migration in urban areas of Kenya and Vietnam, stated that migrants are seen as a key to urban congestion and environmental degradation. These perceptions increase social inequalities through exclusionary policies and practices that tend to limit migrants’ participation in urban planning and governance.

4. Recommendations for Mitigating Inequalities

To address the inequalities associated with migration, there is a need for strategies in sending and receiving countries.

1. Enhancing Legal Pathways for Migration: It is possible to decrease the number of people who travel irregularly by increasing opportunities for legal migration and protecting labour migrants’ rights. This would be particularly productive for both sending and receiving countries given that remittance inflows and treatment of workers in foreign countries.

2. Investing in Education and Skill Development: In sending countries, the Government should direct its investment in education and vocational training to ensure that young people are given the incentive to get employment skills locally instead of moving abroad.

3. Strengthening Integration Policies: In receiving countries, proper Integration programmes and instruments inclusive of language abilities and education give overall well-being to migrants, leading to reduced Separation between the ‘Haves’ and ‘Have Nots’.

5. Conclusion

Migration is a multidimensional process that has both positive and negative impacts on economic inequality. On the development side, it is revealed that money sent home can alleviate poverty while brain drain and unfair opportunities for migration sustain the unequal distribution of wealth. In target countries, the migrants are productive players in the economy while suffering job exploitation and social marginalization which serve as causes of more inequalities. It is critical to note that addressing these challenges is not only a matter of recognising structural processes that underlie migration or offering policy responses to migration that are equally broad and coordinated in their implementation of equity and anti-exclusion. In this respect, societies can enhance the desirable potential of migration as a factor in the global reduction of inequality and, at the same time, develop strategies for dealing with the negative effects of migration.