POL 4410Migration

Structure

1.Economics of migration

2.Political economy of migration

3.Migration Policies

4.Migration and the USA

5.Migration and Security

Economics of Migration

•Think of migration like other flows: from abundant to scarce areas.

•What should relationship be between trade and migration?

•Who benefits in advanced countries? Who loses in developing states?

Economics of Migration

Supply0

Supply1

Demand

Employment

$/hour

C B

D

Economics of Migration

•US income was 0.1% or $8bn higher because of immigration.

•Migration and allocative efficiency

•Moving 100m migrants from low to high income countries could raise world GDP by 8%.

Migration Hump

Migration Flow

Time

A

B

Different Migrants

•Distinguish high-skill migrants from low-skill migrants. Why do high-skill migrants leave areas where they are scarce?

•Refugees and family members - non-economic migration.

•Migrants can also bring capital.

Political Economy•Arrival of low-skill migrants will

reduce returns to low-skilled work following Stopler-Samuleson.

•High-skill individuals benefit from new arrival of low-skill workers as do owners of capital and land.

•What about immigration of high-skill workers?

Race and Religion•Not just economic factors.

•Many countries don’t mind white immigrants, even low-skilled ones. For example, Poles in Europe.

•Nonetheless, think of antipathy towards Irish, Southern, and eastern Europeans in USA in late 19C.

• Islam and immigration.

Migration Policies

1.High Skills: Supply and Demand Policies

2.Low Skills: Guest Workers, Amnesty, and Refugees and Families

3.The Three Rs

High Skills: Supply

•Points systems: Canada, UK, Australia

•Identify high-skilled workers who would ‘benefit’ economy.

•They pick us

•Auctioning visas

High Skills: Demand

•Employer demand. Migrant as ‘most suitable’ applicant for job

•Labor market tests.

•H1B visas.

•Auction off visas to employers?

•Requires significant bureaucracy

Low Skills: Guest Workers

•Guest workers are temporary and fill 3D jobs. germany 1970s. US Braceros.

• Attempt to prevent long-run increase in migrant population.

• But difficult to convince people to go home. End up with families arriving.

•Over-reliance on cheap labor inputs: catsup

• Plus, civil and political problems.

Low Skills: Amnesty

•Reagan offered Amnesty to migrants in 1980s.

•Allows immigrants to enter work force and stay permanently.

•But reduces deterrent threat to illegal immigration.

•Civil and political problems.

Low Skills: Refugees and Families

• Asylum-seekers are the newest group of migrants. From post Cold War collapse of many states: Somalia, Kosovo, Albania, Afghanistan.

• UN Convention on Refugees. 1951.

• ‘owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group, or political opinion, is outside the country of his nationality, and is unable to or, owing to such fear, is unwilling to avail himself of the protection of that country’

• Families: can these groups really be denied access. What to do about family members who do not join workforce?

The Three Rs: Return

•Getting emigrants to return

•Diaspora-led development: Taiwan, Ireland.

•Taiwan Hinschu Science-Based Industrial Park. 40% of companies headed by returnees

•Subsidize returnees through UNDP? Typically returnees only stay as long as the subsidy does.

Remittances• Remittances are massively important

component of income for many states. Multiplier effect of 2-3. Stable.

• Major recipients: India, Mexico, Philippines.

• Jordan (23% GDP), Nicaragua (17%)

• Good source of foreign currency but need official banking channels and low costs

• Brazil floated bond against future remittances in 2001. Some Asian states, Korea, stipulate set level of remittances

Recruitment and ‘Brain Drain’

•Recruiting high skill migrants means taking them out of poor countries where they may be needed: teachers, nurses, doctors, entrepreneurs.

•Compensation?

•Or does ‘brain drain’ actually help poorer states by raising the return to education?

Migration in the USA

• Current Political Debate: 12 million illegals. Pressure on wages and on social services.

• House Bill of 2005: Build Wall, Impose strict penalties on employers, criminalize illegals and those that help them

• Senate Bill of 2005 (McCain / Kennedy): - Z-Visa illegals here for 5 years can apply for

citizenship after paying fine. i.e. amnesty for 10 million. No ‘chain migration’

- Y-Visa 6 yr guest worker scheme- Remove employer sponsorship and replace with

points system- Increased border enforcement

Legal and Illegal

Differences across USA

Dynamic Picture

Latin American Bias

Across Time

Card vs. Borjas

•Card: immigrants cannot have ‘taken’ jobs - they have expanded workforce. Most are unskilled. Wages didn’t change following 1986 amnesty. Mariel boatlift.

•Borjas: argues that those without college have suffered 5% decline in real wages or $1,200 per annum.

Peri Data

•U-Shaped Immigration

• Immigration - at worst - produced one seventh of the gap between low skill and high skills

• Importance of Skill Complementarities

• Giovanni Peri Presentation

Minutemen and Lou!

•Minutemen

•Lou!

Migration and Security

•All of the 9/11 attackers entered US through migration schemes.

•But most of the attacks in Europe have been by 2nd generation immigrants.

•Restrictions on entry have greatly reduced numbers of foreign students.

•Cost benefit analysis.

Rudolph

•Migration is higher during times of major security threat because of ‘rally around flag’: e.g. during Cold War.

•65% of Americans favored restrictions in 1993 compared to 42% in 1977. Prop. 187 passes in CA in 1994.

Migration post 9/11

•65% of Americans post 9/11 wanted to stop ALL immigration (Fox News).

•Mexicans as ‘terrorists’ (see Minutemen)

•Fingerprints for visitors. EBSVERA (2002)

Migration Elsewhere

Education of Migrants

Unemployment

Migration and Diversity

•Jan Nederveen Pieterse argues that globalization is creating diversity and ‘hybrid cultures’ rather than a McWorld.

•Is this driven by migration or trade?

•Can we import culture without importing people?

Effects of Globalization on

the Welfare State•NEGATIVE: Ability of citizens to

move and businesses to leave means taxes must be kept low.

•POSITIVE: Volatility caused by trade shocks and capital flows means citizens demand ‘protection’ from the state.

Trade and Finance (Garrett)

•Collision Course vs. Virtuous Circle

•Argues that despite increased trade and capital mobility since 1960, governments are able to sustain heavy budget deficits and to tax capital at high rates.

•Consequently, the welfare state is unlikely to be ‘harmed’ by globalization

Trade

Finance

Public Spending

Taxation of Capital

Effects of Migration on Welfare State

• Borjas argues that OECD states are ‘welfare magnets’ attracting migrants. Shows that immigrant welfare recipients cluster in high welfare US states.

• Razin and Sadka show that where pension systems are large, welfare state may be supported by migration, even of low skilled workers.

• Europe and US thus face different impact on welfare state of migration.

Labor in the Developing World

•Why do we see migration if trade is good for the poor in the developing world? Can trade substitute for migration?

•Longstanding argument about whether unskilled in developing world benefit from trade or lose out.

•Are sweatshops and child labor good or bad things?

Does Labor Benefit? (Rudra)

• Nita Rudra argues that H/O model predicts that unskilled labor in developing world should benefit from globalization.

• If economic power translates into political power, they would advocate for government spending. But such spending is low. Why?

• Rudra creates Potential Labor Power (PLP) index which measures (a) strength of unions, and (b) ‘reserve’ army of informal sector. Without PLP, workers, though richer, cannot gain political goals.

Two Cheers for Sweatshops

•Sweatshops are certainly very harsh

•But...

1.Are preferable jobs attainable?

2.Can sweatshop jobs act as a first step to better conditions?

‘Dying for Growth’?• Millen and Holtz argue that MNCs

subcontract to local firms that violate labor laws and pay low wages.

• Export Processing Zones are often made exempt from labor laws

• Lax environmental regulation is also problematic. Maquiladoras receive raw materials from USA but fail to repatriate waste. Ends up in Mexico.

D’Mello and Reebok

•Concept of ‘manufacturing without factories’

•Focuses on Reebok’s subcontractor Phoenix International near Delhi. Sexual abuse, beatings, forced overtime.

•Labor organization and strike lead to Reebok ending its contract.