While in the short run, these effects on inequality are likely to be dominated by the direct inequality-reducing effect that stems from the income support for the unemployed (see Joumard et al., However, cutting back on benefits may help to reduce the income gap between immigrants and natives as the former appeal- to suffer more from adverse employment effects (Causa and Jean, 2007). At the same time, the impact of product market liberalisation on labour income inequality is uncertain: while higher employment should reduce inequality, ceteris paribus, this may potentially be offset by a wider earnings dispersion.