Thursday, September 1, 2011

The economics of emigration

Read Michael A. Clemens's paper Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?, from the Journal of Economic Perspectives.



How large are the economic losses caused by barriers to emigration? Research on this question has been distinguished by its rarity and obscurity, but the few estimates we have should make economists’ jaws hit their desks. When it comes to policies that restrict emigration, there appear to be trillion-dollar bills on the sidewalk.


The paper goes on to argue that not only are the negative economical effects of emigration, on both the country of departure and arrival, overestimated, but that the positive impact on the world economy is greatly underestimated. For instance:



In historical cases of large reductions in barriers to labor mobility between high-income and low-income populations or regions, those with high wages have not experienced a large decline. For example, wages of whites in South Africa have not shown important declines since the end of the apartheid regime, despite the total removal of very large barriers to the physical movement and occupational choice of a poor population that outnumbered the rich population six to one. The recent advent of unlimited labor mobility between some Eastern European countries and Great Britain, though accompanied by large and sudden migration flows, has not caused important declines in British wages.


Or, in other words:







In my mind, what this simply means is that the most effective development aid we can give to third world countries is to let more of their citizens move here. This would lead to increased prosperity for us and them, or in other words, everyone. Most often, the economic argument against immigration is framed as in the video above. Perhaps the second-most common argument seems to assume that in each country, there are a fixed amount of jobs. Given that this involves jettisoning even the most basic understandings of how a market economy works, it's almost unbelievable that it can be advanced as an argument. To some extent, I suppose that speaks to the level of economic understanding imparted by our school systems.



There is no data that suggests that "unchecked immigration" would destroy Europe economically; on the contrary, there is data that much broader immigration would enrich the world immensely.

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