1. The impact of globalization
Migration
The impact of globalization

2. Plan of work Terminology and measures
International migration
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. Segmented labor markets
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

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