10 December 2012

Everything you ever wanted to know about migration and development

Well not quite, but the latest Development Drums podcast with Michael Clemens covers a lot of ground, including the case that should now be familiar for why migration has such enormous potential for development, and rebuttals to some of the most common criticisms. I am though continually amazed by how many smart development-industry types are so sceptical about migration (so if this is you, listen to the podcast now).

And for the wonks, there are also a couple of papers that were new to me:

A paper by Branko Milanovic calculating the determinants of individual earnings across countries. Earnings are partly determined by individual characteristics, and partly simply by what country you live in. Which is more important? It turns out that 59% of the differences in earnings is determined just by the country you live in. More than all of your personal characteristics - your experience, your education, your talents, your effort - all of it. I think that one of the defining differences between the left-wing and the right-wing is in the underlying assumptions about the determinants of individual success. Is it down to luck, or skill? If success is primarily due to skill, then a free market is going to deliver "fair" outcomes and the government should butt out. You work hard, you do well. But if success is primarily due to chance, then you can work as hard as you like, but it won't do much good if you were unlucky to begin with. So there is a "fair" case for the lucky to compensate the unlucky. So the life chances of humans born on earth are at least 59% chance. If you're born in Togo, the odds are stacked well against you.

Second, an old paper by David Card from 1990. In 1980, the US and Cuba made a one-off agreement to admit as many people as wanted to move. Over 100,000 people moved from Cuba to the Miami area. This amounted to a 7% increase in the Miami labour force in just 3 months - a huge increase. And yet there was no impact on unemployment or wages of existing workers in Miami.


Derrill Watson said...

From my days in a graduate labor economics class, I recall the boatlift paper also drew a fair amount of criticism. It wasn't a 7% increase in Miami's labor fource, for instance, but a much smaller increase spread over a much larger area. That makes the dif-in-dif estimates less comparable.

rovingbandit said...

Thanks Derill. There are similar (non) results from the recent Polish/Eastern European immigration to the UK following EU enlargement. Do you know any papers that do show a robust negative impact on unemployment from immigration?

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