Thursday, September 21, 2006

Immigration as Global Development

Sebastian Mallaby lays out the case that immigration is a great force for reducing global poverty.

In "Let Their People Come," a new book published by the Center for Global Development, Lant Pritchett reports that if rich countries permitted extra immigration equivalent to 3 percent of their labor force, the citizens of poor countries would gain about $300 billion a year. That's three times more than the direct gains from abolishing all remaining trade barriers, four times more than the foreign aid given by governments and 100 times more than the value of debt relief.
That is a lot of money, but I am not surprised.
Still, Pritchett's numbers show that the development gains from migration swamp the brain-drain problem. For the migrants themselves, a ticket to the rich world is the fast track out of poverty: A laborer who moves from San Salvador to Phoenix can multiply his income without altering the type of work he does or how good he is at it. And this process benefits developing countries, too. Migrants send home remittances, which exceed aid flows and are probably more effective, since the migrants ensure that their hard-earned cash is used productively by relatives. After a few years the migrants may return home armed with savings and ideas. The brain drain becomes a brain gain.
This is almost exactly the same case that I laid out in the Brain Drain Myth.
It's true that there's a downside to immigration from poor countries. This isn't that it depresses wages in the United States; researchers find that this effect is small or nonexistent. Rather, it's that when doctors, nurses and other skilled people leave Africa, they hit the development process in its weak spot. A lack of trained workers is a more serious obstacle to poverty reduction than any lack of money.
I basically agree with this point, although in the Brain Drain Revisited, the case is made that the poor country could actually come out ahead in this case too. The dream of working in America should cause more people to go to school to become a doctor, nurse or engineer. If the number of additional people who study is greater than those that actually end up going to the US, then the country comes out ahead.
So migration ends up as a net plus for development. But a development-friendly migration debate would sound different from the current one. Immigration advocates in the rich world feel most comfortable making the case for allowing in skilled workers. Skilled migrants, however, trigger the biggest brain-drain concerns; allowing in unskilled workers does more to reduce global poverty. Equally, immigration advocates tend to want arriving workers to assimilate. But the best way to promote development is to allow a rolling cohort of poor workers to amass savings and experience -- and then return to their own countries.
Interesting, as Americans we want the most skilled people to immigrate, but from a global development standpoint we want to bring in the least skilled.

via The Washington Post


crush41 said...

Does he control for the suppression of wages this would cause? Does he consider the external costs, the lowering of national IQs (which itself is positively correlated with PPP at over .6), the number of highly skilled professionals that would be devoted to providing services (lawyers, doctors, accountants, etc) for mostly unskilled workers rather than creating new products and offering new services?

Or does he simply look at the productivity 'advancements' that are realized by third-world migrants when they hop into the seat of a Caterpillar?

I'm always weary of claims that economic liabilities are somehow advantageous for the developed countries that assume them.

mping said...


Based on this article I think he believes that the wage suppression is not that large (and I would tend to agree). And of course as consumers we are better off if wages are suppressed as our money goes further. I have no clue on lowering of IQ or professionals reallocating their time.

I think the author was just trying to say that the world would be better off through increased immigration rather than saying that the US would be better off. That if you are looking for a way to help poor countries, immigration is more effective than either increased trade or foreign aid.

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