[solo]

For a long time I have genuinely believed that migration is good for poverty reduction. I want to find out if this is just another blue pill view that I have been spoon-fed by libertarians/classical liberals.

Basically, migration is like free trade, only with people instead of goods. When there is labour migration from a poor to a rich country, theoretically, the sectors in the poor country which experience a reduction of labour supply (usually blue collar jobs, manual labour etc) should see an increase in their salaries. Obviously the same sectors in the rich country which experience an increase of labour will conversely see their salaries drop. (But no one argues that free trade or migration is good for everyone - the argument being made is that the economic net effect for the whole world is positive and that the losers should be compensated - which in practice they rarely are, though). Then there is the issue of remittances, which is said to help poor countries (many working immigrants send money back to their relatives).
Roosh argued that poor countries lack a proper labour market which can provide job prospects and that remittances turn countries into beggar states without making them productive (see the comments section of this post: http://www.returnofkings.com/1683/demogr...-upon-us).

In the original post he also argued that the "brain drain" of poor countries with high emigration rates erode their human capital. Personally, I am unconvinced about this since the majority of the emigrants have a low human capital to begin with and very limited possibilities to increase this capital in their home countries (but anyone, feel free to correct me here as well).

Anyway, since there are theories to either side of the argument, it would be sensible to look for empirical evidence in order to settle the issue.

If the pro-immigration libertarian camp is right, then a country like Poland should have seen an increase in their wages in recent years given the fact that so many Polish men have emigrated to other EU countries to work as plumbers and such jobs. But I admit I have only found anecdotal evidence of this, at least so far. There are countless of anecdotal evidence of positive (and negative) effects of migration but it's necessary to find more large scale studies in order to prove that migration is either bad or good for the economy (and poverty reduction). Such statistics could be:

- Changes in the real wages of sectors in poor countries whose workers have emigrated
- Changes in the poverty rates of countries which has experienced mass emigration
- GDP growth in countries which has experienced mass immigration
- Etc

I am open to change my mind if anyone here, by providing theory and empirical evidence, can convince me that I've been wrong. Clearly it is an empirical question (as opposed to a normative one). The issue is though that it might be hard to prove either way, with so many factors (and different kinds of migration) at play.

So you are welcome to discuss the economic consequences of migration in this thread.

[scotian]

In Canada we have a lot of doctors who've immigrated here in the past few years and its been a controversial topic since their skills are definitely needed in their home country. I don't think doctor poaching has a big impact on GDP but it certainly is a benefit to the Canadian health care system and a major loss for South Africa, whose government probably subsidizes their education.

The same thing happened for years with Canadian health care professionals leaving to work in the USA although the trend has slowed a bit in recent years, it will likely occur again if the Obama health care plan is fully implemented.

[Sonsowey]

It really depends.

I have known many latin american immigrants who feel that coming to the US was a hugebwaste of time. they believed their lives would be great here but just ended up living in the hood being poor. Especially if you dont speak the language or have any skills, it can be awful living at the bottom of the pyramid in a foreign land.

Of course, i believe in the free movement of people. Its only decent to let anyone try to live anywhere he like. As a citizen of the US i get that privelege and i believe all should share it. but of course many people make decisions that are ill informed and turn out poorly.

IT shouls be allowed but it does not always help. Thats the case with the freedom to chosose though.

[solo]

Someone by the name Lou left this comment on the page I linked in the OP:

"“One of the most surprising findings in modern economics is that the brain drain reduces global poverty. On balance, the outflow of talent from poor countries to rich ones is actually good for poor countries — and even more so for poor people, since many escape poverty by emigrating.”

http://www.foreignpolicy.com/articles/20...rain_drain

“Statistical analysis of state-level data shows that immigrants expand the economy’s productive capacity by stimulating investment and promoting specialization. This produces efficiency gains and boosts income per worker. At the same time, evidence is scant that immigrants diminish the employment opportunities of U.S.-born workers”

http://thinkprogress.org/yglesias/2010/0...?mobile=nc"

...

Now, I know enough about statistics to say that a few studies doesn't necessarily prove anything. You need more proof, preferably with different samples and methodologies. That's why anyone who sits on statistics that indicates negative economic consequences of migration is welcome to post them here for all to consider. Of course, it would have to be a study that analyses the long term effects, since it's obvious that a first generation immigrant will almost always have a negative impact on the economy *initially* when he's just arrived in the country and hasn't had time to find work and pay taxes etc.

Which bring me to another point; the welfare state and mass immigration are not compatible in the long-run.

Also, this is partly for another discussion but it is interesting to consider the social effects of migration and not just the economic ones. Those Norwegian girls who were victims in the rape-wave recently obviously haven't gained anything from immigration. And you can't really measure that kind of things in money.

[bface]

I think it is ridicilous to divide people into segments by arbitrary lines someone drew on a map. That someone is from another "country" should have no more bearing than if he was from another city.

Even if it had negative effects on a country to open up the borders, that just means that those positive gains had been gained on the expenses of others suffering. One should not favor one or the other just because they belong to the same "country".

Free trade and free movement should be the normal state of being. Everything else is nothing else than a monopoly imposed with force.

[solo]

bface, personally I agree with everything you said. Still, it would be important and interesting to be able to prove what consequences migration has.

[bface]

(12-26-2012 11:01 PM)solo Wrote:  

bface, personally I agree with everything you said. Still, it would be important and interesting to be able to prove what consequences migration has.

Agreed, but then data is often cherry picked to represent a certain view. Personally I think such issues should be approached in a rational way to see what is the right position.

I'm sure there is a lot of data out there supporting both sides. The world is not a scientific study though and there are too many unknown factors involved.

It's good to look at the data and look for correlation, but in my opinion one should not base his position on it.

[WestIndianArchie]

North Korea doesn't allow immigration at all.
By retaining their best and brightest, and keeping out those foreigners, the average N. Korean citizen enjoys a high standard of living.

The same pattern has played out in Myanmar and Cuba!

Oh wait....

I really don't get how otherwise intelligent people get suckered into believing these wholly unsupported arguments about how the world actually works. It's like you take the red pill about the true nature of the sexual market place, and then extend it to everything. Folks who read the fountainhead or das kapital who only view the world the way those authors viewed it. John Galt and Bourgeoise pigs..

Smh

WIA

(12-24-2012 11:11 PM)solo Wrote:  

For a long time I have genuinely believed that migration is good for poverty reduction. I want to find out if this is just another blue pill view that I have been spoon-fed by libertarians/classical liberals.

Basically, migration is like free trade, only with people instead of goods. When there is labour migration from a poor to a rich country, theoretically, the sectors in the poor country which experience a reduction of labour supply (usually blue collar jobs, manual labour etc) should see an increase in their salaries. Obviously the same sectors in the rich country which experience an increase of labour will conversely see their salaries drop. (But no one argues that free trade or migration is good for everyone - the argument being made is that the economic net effect for the whole world is positive and that the losers should be compensated - which in practice they rarely are, though). Then there is the issue of remittances, which is said to help poor countries (many working immigrants send money back to their relatives).
Roosh argued that poor countries lack a proper labour market which can provide job prospects and that remittances turn countries into beggar states without making them productive (see the comments section of this post: http://www.returnofkings.com/1683/demogr...-upon-us).

In the original post he also argued that the "brain drain" of poor countries with high emigration rates erode their human capital. Personally, I am unconvinced about this since the majority of the emigrants have a low human capital to begin with and very limited possibilities to increase this capital in their home countries (but anyone, feel free to correct me here as well).

Anyway, since there are theories to either side of the argument, it would be sensible to look for empirical evidence in order to settle the issue.

If the pro-immigration libertarian camp is right, then a country like Poland should have seen an increase in their wages in recent years given the fact that so many Polish men have emigrated to other EU countries to work as plumbers and such jobs. But I admit I have only found anecdotal evidence of this, at least so far. There are countless of anecdotal evidence of positive (and negative) effects of migration but it's necessary to find more large scale studies in order to prove that migration is either bad or good for the economy (and poverty reduction). Such statistics could be:

- Changes in the real wages of sectors in poor countries whose workers have emigrated
- Changes in the poverty rates of countries which has experienced mass emigration
- GDP growth in countries which has experienced mass immigration
- Etc

I am open to change my mind if anyone here, by providing theory and empirical evidence, can convince me that I've been wrong. Clearly it is an empirical question (as opposed to a normative one). The issue is though that it might be hard to prove either way, with so many factors (and different kinds of migration) at play.

So you are welcome to discuss the economic consequences of migration in this thread.

[Jack Of All Trades]

I think the issue is that migration is a catch all term and can be divided into different categories to determine whether it is good or bad for an economy. An example is post 1991 when the iron curtain fell huge numbers of communist scientists migrated towards western countries. This is a huge boon upon receiving countries who took them in as it increased the average human capital in receiving countries. Whereas in the scenario where there's an open border with mexico and the US, it becomes more complicated with unskilled labourers crossing the border and crowding out jobs for US born citizens. Labour markets are segmented by a lot of different variables, so it's more complicated than just saying migration is good or bad.

[Lemmo]

Skilled migration is a red herring - a distraction used by those wanting to justify open borders. The vast majority of immigration to the developed world consists of the lower classes of the least developed societies on earth. If someone wants to justify open borders, these are the migrants whose presence needs to be justified. An even more convincing argument would be if a hypothetical justification for the inverse could be made - if America dumped the inhabitants of its slums, ghettos and trailer parks into London, Tokyo, Munich or some other developed country city, how would the receiving city be improved? These would be migrants from the developed world so they should actually be higher quality than the typical 3rd world migrant to the developed world.

[Therapsid]

I would venture one utilitarian argument against open borders:

The technological innovation which is the leading contributor to improved living standards and longer lives only originates among a small intellectual elite in a handful of nations. To the extent that the social fabric and economies of those few nations pushing the technological frontier forward is damaged, we might expect less progress not just for their own peoples but for the rest of mankind as well.

This argument would follow if say Africans benefit more from medical and industrial technologies developed in the West and Japan than they do from migration to Europe and the U.S. *and* that increased immigration to industrialized countries hurt their ability to innovate. This latter issue is contentious, after all, the most diverse developed nation the U.S. is the most innovative.

But I suspect we may coming to a point where America is becoming too diverse and that it may hurt our ability to produce robust economic growth and innovation. Certainly the trend for GDP growth rates is down, not just since the Great Recession but well before. The 2000's were the weakest economic boom in modern U.S. history, they were followed by a financial collapse and then today the weakest economic recovery on record.

[Excelsior]

(12-24-2012 11:11 PM)solo Wrote:  

In the original post he also argued that the "brain drain" of poor countries with high emigration rates erode their human capital. Personally, I am unconvinced about this since the majority of the emigrants have a low human capital to begin with and very limited possibilities to increase this capital in their home countries (but anyone, feel free to correct me here as well).

It is entirely possible for a nation to suffer an erosion of human capital via migration even if the majority of the migrants are not of high human capital themselves.
Ex: Nation A has only 2000 qualified engineers. 1500 of them emigrate to Nations B and C. 7000 additional low-skill migrants went with them.

In this case, most of the migrants from Nation A were not of high human capital, but it can still be argued that Nation A suffered an erosion of human capital because it lost a large percentage of its citizens with higher human capital.
It isn't just high emigration rates in general that cause a brain drain. It is the migration of their elite that causes the issues.

The brain drain is not a universally negative phenomenon. The migrants themselves benefit from the opportunity to move to a wealthier nation, while those migrants can also enefit the home nation via remittances. Nations that have seen serious brain drains have not been excluded from economic growth in recent years.

What the brain drain does do, however, is ensure that developing nations will not close the gap (in terms of their living standards or their economics) with their western peers. There can only be so much progress when 95% of your best and brightest are off in other parts of the world.

And no, I'm not making an argument against emigration. The consequences simply are what they are.

[pitt]

I believe this has its advantages and disavantages. Just for the record, in july 2007 a University of Arizona published a study that estimated that the state's annual economic output would fall 8.2 percent if all illegal immigrants were detected, discharged and deported - a loss of $29 billion. Note that this study didnt include the loss of output from businesses forced to close if their lost their business licenses.

The problem with the US in terms of immigration is that the US is not even pro-immigration for foreigners with high capital ( i thought Mccain would change things if he came in power, he had better laws for foreigners than Obama). Canada, Germany and New Zealand have better laws for foreigners with high capital. Germany gives legal immigrants status to anyone who invests 500,000 euros or more in german businesses or starts a business in Germany that employs at least 5 people. New Zealand has a similar program and Canada's may well be the most effective in the world at bringing capital and capitalists to the country. A foreigner can become eligible to live in Canada if he brings $800,000 legally earned in business or if he has $300,000 and agrees to start a business in Canada.

Solo I dont know why you are so concerned on what happens in the home countries of people that immigrate abroad. You should be more concerned in what these people will bring to your country.

May be i misunderstood your question because my argument was favouring (looking at ) the country that hosts immigration.

[solo]

This article from the Economist is all I've found. It might be worth a read if you're interested in the subject.

http://www.economist.com/news/finance-an...f=activity

Free exchange
Border follies
Liberalising migration could deliver a huge boost to global output
Nov 17th 2012 | from the print edition

IN BAD economic times the temptation to bash immigration is overwhelming. “Get the stench out of Greece,” runs a slogan of Golden Dawn, an increasingly popular anti-immigrant party there. David Cameron has pledged to more than halve annual net migration into Britain by 2015. In America Republicans are wondering how much anti-immigration rhetoric contributed to Mitt Romney’s defeat in the presidential election. A change of political tune is badly needed. Evidence suggests that increased flows of people across borders could ignite global growth.

The economic case for migration is similar to that for free trade. Trade benefits countries by letting workers specialise in activities in which they are relatively more productive, raising output. And the larger market created by trade spreads the fixed costs of innovation more thinly, encouraging the development of new goods and ideas. Governments began the long march towards trade liberalisation after grasping that its upsides outweigh its costs, leaving a surplus large enough to compensate the losers.

Immigration is an afterthought, in both practice and theory. In traditional trade models wages converge across trading partners with similar technologies even without migration, a phenomenon winningly branded “factor-price equalisation”. Sadly, factor-price equalisation is a real-world rarity. As of 2000, for instance, a worker in Mexico earned a wage 40% that of a Mexican-born worker of similar education and experience working in America.

Most of this wage gap is down to productivity differences, stemming from disparities in the quality of infrastructure, institutions and skills. An individual worker, however talented, cannot hope to replicate the fertile environment of a rich economy all on his own. But transplanting a worker into rich soil can supercharge his productivity. A Mexican worker earns more in the United States than in Mexico because he can produce more, thanks to the quality of US technology and institutions.

Millions may move from poor world to rich without bidding down wages in the rich country relative to the developing one. True, a rapid burst of immigration might temporarily reduce wages. But if the pace of movement is slow enough to allow investment to adjust, borders could open without any wage dislocation in either origin or destination economies. Migrants themselves would benefit handsomely, however. In a new paper* John Kennan of the University of Wisconsin-Madison estimates that opening borders could raise the average wage of workers from developing countries by $10,100 a year, or more than 100%, thanks to the large rise in the incomes of those opting to migrate.

Those bigger incomes should swell global GDP. In a recent report Sharun Mukand of the University of Warwick calculates the effect of movement by half of the developing world’s workforce to the rich world. Such a vast migration could never happen in practice, of course, but as a thought exercise it is instructive. If migration closes a quarter of the migrants’ productivity gap with the rich world, their average income would rise by $7,000. That would be enough to raise global output by 30%, or about $21 trillion. Other studies find even bigger effects. A 2007 paper by Paul Klein, now at Simon Fraser University, and Gustavo Ventura, now at Arizona State University, reckons that full labour mobility could raise global output by up to 122%. Such gains swamp the benefits of eliminating remaining barriers to trade, which amount to just 1.8-2.8% of GDP, reckons Mr Mukand.

Even a modest (and more practical) easing of restrictions could be very rewarding. Lant Pritchett of Harvard University estimates that just a 3% rise in the rich-world labour force through migration would yield annual benefits bigger than those from eliminating remaining trade barriers. The incorporation of women into the rich-world workforce provides an analogy: this expanded the labour supply and the scope for specialisation without displacing the “native” male workforce.

Rich-world residents nonetheless worry that migrants will gain at their expense. Yet in a survey of research on the topic Francine Blau and Lawrence Kahn of Cornell University find that few studies turn up a negative impact on native wages. In a recent paper on western Europe Francesco D’Amuri of the Italian central bank and Giovanni Peri of the University of California, Davis find that immigration encourages natives to take more complex work. Such “job upgrades” are responsible for a 0.6% increase in native wages for each doubling in immigrant labour-force share. Where immigration disadvantages subsets of the population, Gordon Hanson of the University of California, San Diego reckons that charging an entry fee to migrants or their employers could help pay for training or benefits for those who lose out.

A frosty welcome

Advanced economies may also fret for their budgets. In a survey of fiscal studies Sari Pekkala Kerr of Wellesley College and William Kerr of Harvard University find that immigrants may sometimes use social services more intensely than natives. Yet it is hard to argue that immigrants are a systematic drain on the public purse. Some newcomers contribute more in tax than they receive in services, offsetting much of the drag from those who are net recipients of public benefits.

Others worry that emigration by talented people may hurt the economies they leave behind. But the possibility of migration creates incentives for people in emerging markets to invest in education, including among those who opt to stay put. Immigration generates remittance flows back home; informal links facilitate cross-country trade and investment. If policymakers can see past their fear of the foreign, the dividends could be huge.

Sources

"Open borders", by John Kennan, NBER Working Paper #18307, August 2012

"International migration, politics and culture: the case for greater labour mobility", by Sharun Mukand, Chatham House Policy Paper, October 2012

"TFP differences and the aggregate effects of labor mobility in the long run", by Paul Klein and Gustavo Ventura, Berkeley Electronic Journal of Macroeconomics, 2007

"Let their people come: breaking the gridlock on global labor mobility", by Lant Pritchett, 2006

"Immigration and the distribution of incomes", by Francine Blau and Lawrence Kahn, NBER Working Paper #18515, November 2012

"Immigration, jobs and employment protection: evidence from Europe before and during the Great Recession", by Francesco D'Amuri and Giovanni Peri, NBER Working Paper #17139, June 2011

"The economics and policy of illegal immigration in the United States", by Gordon Hanson, Migration Policy Institute, 2009

"Economic impacts of immigration: a survey", by Sari Pekkala Kerr and William Kerr, Finnish Economic Papers, Spring 2011

Economist.com/blogs/Free exchange

from the print edition | Finance and economics

[solo]

(12-26-2012 10:49 PM)bface Wrote:  

Even if it had negative effects on a country to open up the borders, that just means that those positive gains had been gained on the expenses of others suffering.

According to this study, although developing countries as a whole were made better off by the Uruguay Round, some regions actually were worse off because of it. The 48 least developed countries lost 600 million UDS, while China captured most of the gains: http://infojustice.org/download/gcongres...rticle.pdf
Just pointing out that it's not all black and white. Then again free trade agreements are seldom or never nor symmetrical nor perfect.

(12-26-2012 11:12 PM)bface Wrote:  

(12-26-2012 11:01 PM)solo Wrote:  

bface, personally I agree with everything you said. Still, it would be important and interesting to be able to prove what consequences migration has.

Agreed, but then data is often cherry picked to represent a certain view. Personally I think such issues should be approached in a rational way to see what is the right position.

I'm sure there is a lot of data out there supporting both sides. The world is not a scientific study though and there are too many unknown factors involved.

It's good to look at the data and look for correlation, but in my opinion one should not base his position on it.

Agreed. Though it does help to have some sort of back-up, especially since it often adds weight to an argument and thus can have political effect.

[solo]

(12-29-2012 07:55 AM)pitt Wrote:  

Solo I dont know why you are so concerned on what happens in the home countries of people that immigrate abroad. You should be more concerned in what these people will bring to your country.

May be i misunderstood your question because my argument was favouring (looking at ) the country that hosts immigration.

Yes I was curious what happens in both countries (both the country the emigrant leaves and the country he goes to).

I realize now it's maybe a bit too ambitious to figure this out however...