The Future of Migration: Irresistible Forces meet Immovable Ideas

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The Future of MigrationIrresistible Forces meet
Immovable Ideas

• Lant Pritchett
• March 11, 2004
• Harvard Center for Population and Development
  Studies

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Future of Migration

• Five irresistible forces in the global economy
  are producing increased pressures for labor
  mobility
• Four immovable ideas are blocking these force
• Reconciling these in a development friendly way
  requires reconciling these

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Five Forces

• Increased global inequality
• Large changes in optimal populations
• Demographic changes
• Increased connections in every other
  spheregoods, capital, ideas
• Limits of capital/labor substitution and labor
  saving innovation

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Force 1 Increased Inequality
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Force 1 Increased inequality
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Force 2 Changes in optimal population

• Most existing growth theorizing is
  fundamentally aspatial
• Labor mobility, when possible, appears to be a
  substantial component of adjustmenteven with
  mobile goods and capital

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Force 2 Changes in optimal populations

• Borders to labor flows closed post WWInever
  really re-opened
• End of colonialismdramatic expansion in number
  of sovereign nation-states with policy and
  institutional differences
• Some attempts at integration of trade (GATT/WTO)
  and capital marketsglobalization
• How is this experiment going to turn out?
• Optimism vs. Pessimism

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Expansion in s of countries
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Elements of a model

• Output determinationfunction of factors,
  productivity (could have agglomeration)
• Factor accumulationlong-run factors depend on
  policies, institutions, productivity, geography
• Populationdesired population depends on
  output/factor accumulation and on utility

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Desired population

• Equation for desired population with virtual
  taxes

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Optimal population Example 1
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Optimal population Example 1 (cont)
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Optimal population Example 1 (cont)
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Optimal population Example 2
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Optimal population Example 3
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Optimal population Example 3
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Force 3 Demography

• Fertility has collapsed in Europeslowly in some
  parts (e.g. Germany), rapidly in others (e.g.
  Italy)
• Projections are the support ratio in Europe
  (25) will fall from 4.25 to 1.82 (Demeny)
• Population of North Africa/West Asia increases to
  3 times Europe

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EU (25) and Muslim tier, 1950-2050 Population
(millions) (Demeny)
Muslim tier
EU (25)
Source UN 2002
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Forecast dependency ratios in France with various
fertility assumption (from Demeny)
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Force 4 Increased connections to everything else

• Trade is substantially liberalized
• Movement of capital has been substantially
  liberalized
• Movement of ideas is more rapid (instantaneous)
• Movement of people is cheaper and cheaper

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Force 4 Connections Globalization of
everything but labor

• Winters (et al) estimate the gains from modest
  increases in labor mobility exceed all trade
  liberalization
• Why continue to liberalize high wage
  industriese.g. finance, banking, consulting and
  not low wage industries?

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Why is this graph so facetious?
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Force 5 Capital labor substitution

• Technological innovation to reduce labor in
  advanced countrieswhy are we automating
  checkouts?
• The limits to imports of embodied laboreven
  with the lowered cost of telecommunications

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Immovable Ideas Increasing Immigration is very
unpopular
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The Four Immovable Ideas that Legitimize
Compulsion in the advanced democracies

• Nations exist, are defined by more
  commonalities and nation-states are a
  reasonable organization of an international
  system
• Labor inflows are bad for the poor in rich
  countries
• Labor mobility is not necessary for prosperity
  everywhere
• Proximity is all that matters for moral
  obligations

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Labor mobility as plan B

• Reconciling the irresistible forces with
  immovable ideas is an enormous challenge
• The existing mechanisms for international
  agreements are inadequate for labor mobility
• Bringing migration onto the agendawhen the
  MDGs failthen what?

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Idea 1 Whither Nationalism?

• Nationalism has become a strong social
  identification and makes it natural to
  discriminate across borders in ways unthinkable
  within borders.
• Is nationalism waxing or waning with
  globalization? Hollowing out?

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Idea 2 Increased labor flows are bad for the
poor in rich countries

• Almost certainly true by simply demand and supply
  arguments (Borjas)
• Exactly true of similar quantity of labor
  embodied in tradebut economists have a different
  reaction
• The rich of the poor countries are considerably
  poorer than the poor of the rich countries

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Idea 3 Labor mobility is unnecessary
Optimism

• Optimism I Solow
• Optimism II Income depends on policies and
  institutions that are amenable to changeso
  conditional convergence and with converging
  fundamentalsabsolute convergence
• Optimism III Factor price equalizationmovemen
  ts in goods are sufficient for factor price
  convergenceor at worst trade and factor
  movements are substitutes not complements

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Idea 3 Labor Mobility--pessimism

• Pessimism I Agglomeration economiesincreasing
  returns to scale the big/rich get bigger/richer
• Pessimism II Geographic factors lower the
  steady state level of output
• Pessimism III Changes in geographic factors
  lead to changes in the desired population of much
  larger magnitude that rates of natural increase
  differences can accommodate

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Idea 4 Ethics do not extend across borders

• Do liberal ethical theories (e.g. Rawls) extend
  only nationally (nearly everyone) or
  internationally (Carens)?
• Why is one system of labor restricting permits
  that force people of color to stay in physically
  separateand poor--regions of the world called
  apartheid and another visas?
• Proximity is all that matters
• Haitians in Haiti versus Miami?
• Animal rights?

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Six elements of a viable mechanisms for
increasing labor mobility

• 1) bilateral agreements between host and sending
  countries
• 2) allow for temporary movement of persons in a
  regime separate from immigration,
• 3) have numerical quotas for specific
  occupational categories (and internal regions in
  the host country?),
• 4) enhance the development impact of the labor
  movement through agreements with the sending
  country government.
• 5) impose automatic penalties on the sending
  country (and host country employer) for laborers
  who overstay,
• 6) protect the fundamental human rights of
  laborers