The Logic of Migration

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This paper discusses migration for economic, social and political reasons as a livelihood strategy and as part of a wider development strategy, and challenges some criticisms on the part of both sending and receiving countries, before proposing an agenda for change.
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    The logic of migration Catherine Barber This paper discusses migration for economic, social and political reasons as a livelihood strategy and as part of a wider development strategy, and challenges some criticisms on the part of both sending and receiving countries, before proposing an agenda for change. This background paper was written as a contribution to the development of From Poverty to Power: How Active Citizens and Effective States Can Change the World , Oxfam International 2008. It is published in order to share widely the results of commissioned research and programme experience. The views it expresses are those of the author and do not necessarily reflect those of Oxfam International or its affiliate organisations.    The logic of migration From Poverty to Power - www.fp2p.org 1   Why do people move? The academic literature on voluntary migration offers numerous explanations, but the simplest one is this: people perceive opportunities – economic, social and political – that are not available to them in their place of srcin, and they move towards them. Inequalities in economic opportunities across nations are particularly stark. Wages in rich countries are around one hundred times higher than in the poorest countries; the industrial wage in the US is around $13 an hour; in Viet Nam, just 13 cents an hour. 1  Yet, while characteristics such as education, work experience and health explain variations between individuals’ wages within  countries well, they explain only a tiny fraction of the variations amongst  them. Nearly all of the differences in wages of individuals are explained by their national locations rather than their personal characteristics. Data on actual migrants illustrate this dramatically. When people move, their wages in the receiving country are almost identical to those of local workers and bear little relation to those of workers in their country of srcin. A Salvadorian man with a secondary education who works in the US receives the same wage as the average for an American man with the same education. This wage is almost nine times higher than the wage received by his equivalent in El Salvador. The difference in opportunities between countries has been widening over time. A study by Bourguignon and Morrison estimates that in 1820, only one tenth of the difference in incomes among all individuals in the world was due to differences in average incomes across countries. Today, 60 per cent of global inequality is attributable to differences in incomes across countries. 2  Borders matter more today than ever before. Curiously, even in the face of huge global inequalities and incentives for cross-country mobility, we wrongly assume that nation states and their populations are fixed. This is historically inaccurate. In the early 20 th  century there were around 40 sovereign nations. Today there is around 200, as a result of which labour markets are more local and more segmented than at any time in recent history. The absolute and relative sizes of countries have also changed radically as a consequence of migration. The peak population of Ireland in the 19 th  century was over 8 million; by 1901 the population had fallen to 4.5 million. In the mid 19 th  century Canada’s population was less than half of that of Ireland, while today it is around five times higher. Our era of globalisation has far greater obstacles to movement than existed in the corresponding 19 th  and early 20 th  century eras. Migration offers opportunities not only for individuals but also their extended families. The most striking evidence of this comes from international remittances. In 2004, developing countries received an estimated $126 billion in official remittances. 3  At a national level, remittances are second only to foreign direct investment as a source of external funding for developing countries, and are several times higher than international aid flows. They are particularly important for low-income countries, standing at 3.3 per cent of GDP compared to 1.3 per cent for middle income countries. They are also significantly more stable than private capital flows. In short, economic migration is a livelihood strategy for both individuals and families, which has huge potential payoffs for them and their countries. 1  Statistics on cross-country income inequalities and historical movements are drawn from Pritchett (2003), see references. Wage comparisons do not adjust for purchasing power; the discrepancies would remain great (though reduced) under adjustment. 2  Bourguignon and Morrison, 2002. 3  Statistics in this paragraph from Ratha and Maimbo, eds., 2005. The total figure for remittances to developing countries - including unofficial flows - is thought to be closer to $200 billion.      Responses to some common criticisms Why is greater freedom of movement not on the ‘economic justice’ agenda? Besides political winnability, there are some questions as to whether migration is a good development strategy. These range from criticisms that migration is bad for individual migrants, their families, their communities of srcin, their countries of srcin and destination, to a ‘meta’ argument that migration is insignificant in the wider scheme of development. These criticisms are addressed briefly here. ‘Migrants wouldn’t move if they knew how hard the experience would be’ It is certainly true that migrants have imperfect information about their places of destination, and their rights, and it is sometimes argued that they would not migrate if they knew how poor labour standards were in their host countries. Yet even when migrants do know how poor the labour standards are in certain countries – for example in the Gulf States – many of them choose to return repeatedly as migrant workers. The fact that people move despite extreme personal hardships may be one of the most compelling reasons for promoting increased legal labour mobility. 4  Whether or not information is limited, people know and respond to the basics: the differences in wages across countries are dramatic. In Cambodia, the average income is $310; in neighbouring Thailand $2,190. In Lesotho, the average income is $500; in South Africa, $2,780. 5  Judging migrants’ decisions as ill-informed – in the face of such dramatic incentives to move – runs contrary to the well-established development tradition of respecting individuals’ livelihood decisions. ‘Migrants’ families suffer social and psychological damage from family separation’ Nobody questions that family separation is painful. Yet most migrants are acting as they consider best for their families, given the opportunities open to them. Arguing that migration is bad for development because it hurts families fails to respect the difficult decisions made, for example, by parents whose choice is between being with their children and migrating to earn the money to see their children through secondary school. One view is that children of migrant parents are so traumatised by their parents’ emigration that this outweighs any other considerations. However, some interesting research from the Philippines - one of the major sources of migrant labour - suggests that that these children’s psychological and health outcomes are on average similar to those of their peers, while their socio-economic outcomes are significantly better. 6   ‘Communities of srcin suffer from the loss of skilled professionals’ Clearly this is sometimes the case, the emigration of medical professionals from Least Developed Countries in sub-Saharan Africa being the most obvious example. For other skilled workers or for other countries of srcin the situation is less clear. As mentioned earlier, migration produces benefits in terms of inward remittances – for example, those from the USA to India are around five times greater than the estimated net loss in taxes - and there may also be ‘network effects’, such as increased business contacts, investments and technological assistance. 7  There is also evidence that skilled workers return to their countries of srcin when the investment climate and work environment improves. 8  At any rate, it should be possible to design a system that promotes greater global mobility without encouraging the emigration of certain skilled workers from countries where they are particularly needed. 4  I am unaware of any survey that shows that the majority of migrants in any destination country regret having moved there.   5  World Bank, World Development Indicators 2004 .   6  Scalabrini Migration Center 2004.   7  Ratha and Maimbo, eds. 2005, p 32.   8  Taiwan is a notable example. See O’Neill 2003. The logic of migration From Poverty to Power - www.fp2p.org 2    ‘Emigration removes a political force for change in developing countries’ This may be true in some circumstances. However, sometimes citizens can be more politically active in relation to their country of srcin once outside it, particularly when they have left a repressive political regime. Furthermore, it is certainly not the case that migrants wash their hands of their communities of srcin when they are abroad; on the contrary, remittance-sending diasporas often have a strong sense of entitlement to comment on domestic issues. Political systems are evolving to reflect this: overseas Filipinos have recently won the right to vote in national elections; Mexicans from certain regions can vote in their municipal and state elections, and non-resident Indians now have an ‘Ambassador at Large’ who represents their concerns to the Indian government. ‘Emigration causes depopulation and the decline of sending communities’ This is true in some cases, and unsurprisingly, the development workers who aim to make these sending regions better places to live, resist such emigration. However, it is worth taking a long-term perspective on population shifts. Places do change – and in hindsight we don’t necessarily regret it. ‘Immigration causes increased inequality in receiving countries’ This concern has received particular attention recently in view of the increased recognition in development circles of inequality as a form of poverty. 9  However, economic studies suggest that the impact is small or even non-existent. Dustmann et al. surveyed the research on immigration, wages and unemployment in the UK and concluded that there is no evidence of a significant impact. 10  Recent studies indicate that cultural rather than economic protectionism is the primary cause of anti-migration sentiments, at least in Europe. 11  Borjas is the main dissenting voice on the impact of immigration, arguing that it has significantly affected wages of low-skill workers in the US. 12  In either case, the existence of winners and losers from immigration should not be a reason to oppose it. Applying the same logic that we use in trade debates, if there are net gains from migration – and most economic analyses suggest this strongly 13  - then redistributive policies in receiving countries can mitigate any pre-tax effect on inequality. The counter-argument may be made that governments in fact won’t  make redistributive transfers, but, as Rodrik notes, that would constitute a reason to oppose imports of labour-intensive goods just as strongly as immigration. This clearly does not happen. 14   ‘Migration will only help a small fraction of developing country citizens’ This is of course true. Even if rich countries allowed migration to increase their populations by ten per cent – an almost unthinkable number in today’s political climate - this would only affect the two per cent of developing country citizens who could move, and their extended families at home. Increased freedom of movement can only be one part of a development strategy. But there is nothing inherently incompatible in saying that people should have greater freedom to move towards existing opportunities, and  that greater opportunities should be promoted in developing countries. Ignoring increased movement as a potential development strategy, on the other hand, implies a confidence in 9  See the UN (2005) Human Development Report 2005 and the World Bank (2006) World Development Report 2006  for illustrations of this debate.   10  This may either be because the skill composition of immigrants is similar to that of the native population, or because production patterns change to reflect the new skill mix. For example, agricultural production is generally accepted to be higher in the UK than it would be without the presence of migrant workers. This does not mean that native workers are displaced from these jobs, but rather that the jobs exist where they otherwise would not. Dustmann, Fabbri, Preston and Wadsworth 2003, ‘The Local Labour Market Effects of Immigration in the UK’, Home Office Online Report 06/03. http://www.homeoffice.gov.uk/rds/pdfs2/rdsolr0603.pdf 11  Preston, Ian and Christian Dustmann (2007) based on evidence from the European Social Attitudes Survey).   ’Cultural protectionism’ is determined by responses to statements such as ‘This country would be better if it were more white or ‘if it were more Christian’. 12  Borjas 1999.   13  See for example Winters 2002, who finds that there would be a $150 billion increase in global income if rich countries allowed immigration to increase their labour forces by 3 per cent. 14  Rodrik 2002.   The logic of migration From Poverty to Power - www.fp2p.org 3
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