A Macroeconomic Perspective on Migration Gino Gancia Trobada - October 21, 2011Gino Gancia () Migration Trobada - October 21, 2011 1/9
The Importance of Migration hard to overemphasize the importance of studying migration basic fact #1 I vast numbers of people in low-income countries want to emigrate I Gallup World Poll: more than 40% of adults in the poorest quartile of countries “would like to move permanently to another country” I 2010 U.S. Diversity Visa Lottery: 13.6 million applications for 50,000 visas basic fact #2 I migration ‡ows are still low I 3% of world population live outside their countries of birth (United Nation, 2009) barriers to migration are often considered one of the greatest distortions of the global economyGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 2/9
Trillion-Dollar Bills on the Sidewalk? Clemens (2011): I e¢ ciency gains from global migration are huge simple exercise, divide the world into: 1 a “rich” region R, where one billion people earn $30,000 per year 2 a “poor” region P, where six billion earn $5,000 per year suppose migrants from P have lower productivity, so that their income gain if they move to R is $7,500 if half the population of P emigrates to R, migrants would gain $23 trillion several quantitative studies report big e¢ ciency gains from migration I Moses & Letnes (2004, 2005), Iregui (2005), Klein & Ventura (2007), Walmsley & Winters (2005), van der Mensbrugghe & Roland-Holst (2009)Gino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 3/9
Gains from MigrationGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 4/9
Who Gains from Migration? Part I destination country? not obvious I worse terms of trade, erosion of comparative advantage (Acemoglu & Ventura, 2002, Davis & Weinstein 2002) I congestion I complementarities (Cortes 2008, Cortes & Tessada 2011, Farré, Gonzalez & Ortega, 2011) I IRS (Ottaviano & Peri, 2006, DiGiovanni, Levchenko & Ortega, 2011) country of origin? not obvious I positive wage e¤ects I remittances I brain drain/compositional e¤ects (Gibson & McKenzie, 2011) big gainers are the migrantsGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 5/9
Who Gains from Migration? Part II what do the data say? I most studies …nd weak e¤ects of immigration on local wages (Borjas and Katz, 2007, Card, 2009) I some (scant) evidence of positive wage e¤ect of large-scale emigration (Mishra, 2007) I externalities are hard to identify (Ciccone & Peri, 2006) for destination country, o¤shoring may be preferable: I technology transfer with no congestion, workers are paid local wages Acemoglu, Gancia & Zilibotti (in progress): I which workers gain from o¤shoring depends on elasticities of substitutions and on the endogenous reaction of technology I at least up to a certain level, everybody should bene…t form itGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 6/9
The Euro, the Crisis and the Welfare E¤ects of Migration to understand the role of migration, go back to the debate on the adoption of the Euro economists took sides in the debate pro-Euro: I would lower in‡ation and interest rates I reduce transaction costs Euro-skeptics: I giving up a policy instrument would make the adjustment to asymmetric shocks painful I particularly if labor markets are poorly integrated both were rightGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 7/9
The EU Disintegrated Labor Markets in 2011, the unemployment rates in US and EU27 are remarkably similar I 9.1% vs 9.5% but within EU national disparities are huge I Spain 21.2%, Greece 16.7% I Germany 7.4% the Netherlands 4.4%, Austria 3.7% regional disparities are even greater: I Andalucía 29.7%, (35.3% in Almería) I País Vasco 11.6% much less dispersion across US states I highest unemployment rate in Nevada, 13.4% I most States are within 2 percentage points from the averageGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 8/9
Why Don’ EU Workers Move? t labor mobility would ease the labor market adjustment to the crisis some important barriers identi…ed in the migration literature are: I cultural di¤erences I language I bureaucratic barriers I availability of information on employment opportunities …nding a way to reduce those barriers will not solve the problem of world poverty but it may go some way towards solving today’ macroeconomic s problems of EuropeGino Gancia (CREi and Barcelona GSE) Migration Trobada - October 21, 2011 9/9
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