Migration

1. Migration The impact of globalization

2. Plan of work • Terminology and measures • International migration 1950-2000 • Migration theories • Migration in the US: timing, composition, trends • Consequences of migration on the local economy

3. Basic terminology • Net versus gross flows: migration rates • NMR= IMR-OMR • Large flows can lead to small net flows • Stock of migrants (foreign born population) • SM=P (foreign born, t) • Different durations; different intentions to stay

9. Some regularities from Table 1 and Figure 1 • The foreign born population remains stationary worldwide (at 2.3%) • Foreign born population as % of regional populations increases in North America (from 6 to 9) in Oceania (from 14 to 18) and in Europe (from 2 to 3). It declines elsewhere • North America contribution to foreign born population is somewhat stationary at about 1/6 of all foreign born populations.

10. Some regularities from Table 2 (estimates of net migration rates • Among developing regions, Central America stands out as a strong sender (-4.2 and -3.1). Africa is another population loser region (-.5 and -.2) • Australia, New Zealand and North America are the gainers: 5.9 and 5.1 per 1,000 and 3.0 and 3.4 per 1,000 respectively. Same as 1900!!! • Developing regions have negative net migration rates (-.5 per 1,000)

11. VERY, very general summary • On average, stock of migrants is only a small portion of total population • Major flows proceed from less developed to more developed countries Does this suggest a driving force? (see next figure). • Migration flows appear to have increased during the last ten to twenty years • Simultaneously laws AGAINST migration have increased (see next figure)

14. What are effects of migration (voluntary not forced) • Receiving countries • Changes labor force composition • Alters K/L ratios favoring the former • Increases overall labor force rate participation • Pressure on welfare flows? • Increases tax base • Sending countries: • Depletes youthful population • Saps low/high skilled labor sources • Generally draws from selected populations • Source of assets (capital inflows)

15. Migration Theories • Neoclassic theory • Segmented labor market theory • New economics theory • Self-perpetuating trends

16. Neoclassic theory • Migration flows are outcome of regional wage inequalities; • Individual calculus of expected (discounted) income streams minus migration costs (E(Y)-E(c); • To the extent that markets are not interfered with, migration stops when wage inequality is identical to migration costs;

17. If NCET is right… • …one should find that, ceteris paribus, whenever wage disparities grow between any two regions, individual propensities to migrate will intensify

18. Primary sector: Skilled Secure High paying jobs Returns to human K Shortage of labor in sector Policies tend to create barriers against migration of skilled labor Secondary sector Unskilled Insecure Low paying jobs No returns to human K Policies favor conditions that maintain abundant supply of unskilled workers (including immigration policies) Native workers tend to move away from this market Segmented labor markets

19. If SLM theory is right… • ….migrants from Mexico must be negatively selected (in terms of human K) • This was true up until 1980 when the Mexican economy entered in crises. After that, even skilled labor was forced out of Mexico

20. New economic theory • Migration not just a response to wage inequalities but to insecurity created by lack of credit, insurance and capital markets (imperfect markets) • HH use migration as part of portfolio of strategies to maximize not just income but an overall “security package”

21. If NET was correct… • ….one would observe that migration flows oscillate as function of establishment of capital markets or insurance contracts • ….one would observe that as remittances penetrate origin and modernize economy, migration flows attenuate

22. Cumulative causation theory • Migration flows tend to perpetuate and reproduce themselves because they create new conditions that favor it, regardless of what the original causes were. • (A) Social networks reduce risk and costs of migration: • Intrinsic (material and psychological) costs • Expected wages and returns at destination

23. Cumulative causation (cont.) • (B) Migration flows have strong impact on local income and income distributions that may promote more migration: • Increase land concentration • Decrease land/labor ratios • Increase use of labor cheapening technology • BUT……also • Increase capital expenditures (housing) • Dry up supply of unskilled labor and heightens pressure on real wages

24. If CCT is right…. • ??????? • ??????? • ??? • Is there some specific consequence NOT predictable from the other theories??? ??? • ??????? • ??????? • ???????

25. Migration patterns in the US: commonplace statements • We hear: “Migration is at an all time high” • We observe: Migration today is low relative to migration 70 years ago. Migration has been increasing since 1950 but at nearly ½ the rates as in the past • We observe: stock of migrants was .07 in 1950, .05 in 1970 (why lower??), .09 in 2000

26. Evidence from NAS Report: 1880-1930 • (see next slide)

30. Migration patterns in the US: commonplace statements • We hear: “Migrants contribute to the excessive growth of US population” • We observe: Contribution is ½ of what it was before closing borders in 1915 but has been on upward trend since 1940

32. Migration patterns in the US: commonplace statements • We hear: “Too many old migrants will exert pressure on Social Security ” • We observe: Migrants’ age distribution has remained youthful and is now more so since there are more children than back in 1910

33. Migration patterns in the US: commonplace statements • We hear: “The quality of migrants is lower than average population in terms of skills and they are poorer” • We observe: (from NAS report) “ Available evidence indicates that skill differences between native and foreign born workers through a period of massive migration were small or non existent; relative quality of migrants did no fall over time”

34. (cont) • …the same applies to migration after 1910: the education and skill levels of the average immigrant is slightly below that of the native born worker… • …but, more recently, the inclusion of illegal migrants may tilt the distribution toward lower education and lower skills

35. Migration patterns in the US: commonplace statements • We hear: “Immigrants increase unemployment” • We observe: Their contribution to labor force is (a) small (b) increase labor force participation rate and (c) rates of unemployment lower among immigrant workers

36. Migration patterns in the US: commonplace statements • We hear: “Immigrants lower wage rates for the rest of the workers” • We observe: their total impact in an economy as large as that of the US is small. Furthermore, traditionally real wages have increased during periods of massive migration. Finally, available evidence suggest that low skilled migrants are not substitutes for native workers but rather than they fill niches left by native workers (SLMT)

38. NAS report: evidence for most recent period is virtually unchanged • On influence on native wages • On fiscal burden

39. The consequence on countries of origin (say Mexico) See also slide No 14 • Depletes pool of skilled (unskilled) workers • Increase K/L ratios thus increasing wage pressure • Makes populations older • Increases inflow of foreign currency: this is perhaps the most influential of all effects. In some cases is massive • Increases inflow of K and corrections to market imperfections • Reduces inequalities between countries?

40. The new immigration: a “putting out” system through the internet • Some jobs can be done by low skilled workers located abroad (low skill jobs): “maquiladoras” for example • Migrations of bodies may no longer be necessary: K can migrate chasing low skilled workers • Some jobs can be done by firms and VERY skilled, but lower paid, workers abroad (role of internet facilitates chase of highly skilled workers at lower wages): • Radiologists • Computer scientists