Theories of migration

1. Migration
The impact of globalization

2. Plan of work
• Terminology and measures
• International migration 1950-2000
• Migration theories
• Migration in the US: timing, composition, trends
• Consequences of migration on the local
economy

3. Basic terminology
Net versus gross flows: migration rates
NMR= IMR-OMR
Large flows can lead to small net flows
Stock of migrants (foreign born population)
 SM=P (foreign born, t)
Different durations; different intentions to stay

9. Some regularities from Table 1 and
Figure 1
 The foreign born population remains stationary
worldwide (at 2.3%)
 Foreign born population as % of regional
populations increases in North America (from 6
to 9) in Oceania (from 14 to 18) and in Europe
(from 2 to 3). It declines elsewhere
 North America contribution to foreign born
population is somewhat stationary at about 1/6
of all foreign born populations.

10. Some regularities from Table 2
(estimates of net migration rates
Among developing regions, Central America
stands out as a strong sender (-4.2 and -3.1).
Africa is another population loser region (-.5 and
-.2)
Australia, New Zealand and North America are
the gainers: 5.9 and 5.1 per 1,000 and 3.0 and
3.4 per 1,000 respectively. Same as 1900!!!
Developing regions have negative net migration
rates (-.5 per 1,000)

11. VERY, very general summary
o On average, stock of migrants is only a small
portion of total population
o Major flows proceed from less developed to
more developed countries Does this suggest a
driving force? (see next figure).
o Migration flows appear to have increased during
the last ten to twenty years
o Simultaneously laws AGAINST migration have
increased (see next figure)

14. What are effects of migration
(voluntary not forced)
Receiving countries
Changes labor force composition
Alters K/L ratios favoring the former
Increases overall labor force rate participation
Pressure on welfare flows?
Increases tax base
Sending countries:
Depletes youthful population
Saps low/high skilled labor sources
Generally draws from selected populations
Source of assets (capital inflows)

15. Migration Theories
• Neoclassic theory
• Segmented labor market theory
• New economics theory
• Self-perpetuating trends

16. Neoclassic theory
• Migration flows are outcome of regional wage
inequalities;
• Individual calculus of expected (discounted)
income streams minus migration costs (E(Y)-
E(c);
• To the extent that markets are not interfered
with, migration stops when wage inequality is
identical to migration costs;

17. If NCET is right…
• …one should find that, ceteris paribus,
whenever wage disparities grow between
any two regions, individual propensities to
migrate will intensify

18. Segmented labor markets
• Primary sector:
– Skilled
– Secure
– High paying jobs
– Returns to human K
• Shortage of labor in
sector
• Policies tend to create
barriers against migration
of skilled labor
• Secondary sector
– Unskilled
– Insecure
– Low paying jobs
– No returns to human K
• Policies favor conditions that
maintain abundant supply of
unskilled workers (including
immigration policies)
• Native workers tend to move
away from this market

19. If SLM theory is right…
• ….migrants from Mexico must be
negatively selected (in terms of human K)
• This was true up until 1980 when the
Mexican economy entered in crises. After
that, even skilled labor was forced out of
Mexico

20. New economic theory
• Migration not just a response to wage
inequalities but to insecurity created by
lack of credit, insurance and capital
markets (imperfect markets)
• HH use migration as part of portfolio of
strategies to maximize not just income but
an overall “security package”

21. If NET was correct…
• ….one would observe that migration flows
oscillate as function of establishment of
capital markets or insurance contracts
• ….one would observe that as remittances
penetrate origin and modernize economy,
migration flows attenuate

22. Cumulative causation theory
• Migration flows tend to perpetuate and
reproduce themselves because they
create new conditions that favor it,
regardless of what the original causes
were.
– (A) Social networks reduce risk and costs of
migration:
• Intrinsic (material and psychological) costs
• Expected wages and returns at destination

23. Cumulative causation (cont.)
• (B) Migration flows have strong impact on local
income and income distributions that may
promote more migration:
– Increase land concentration
– Decrease land/labor ratios
– Increase use of labor cheapening technology
– BUT……also
– Increase capital expenditures (housing)
– Dry up supply of unskilled labor and heightens
pressure on real wages

24. If CCT is right….
• ???????
– ???????
• ???
• Is there some specific consequence NOT
predictable from the other theories???
???
• ???????
– ???????
• ???????

25. Migration patterns in the US:
commonplace statements
• We hear: “Migration is at an all time high”
• We observe: Migration today is low relative to
migration 70 years ago. Migration has been
increasing since 1950 but at nearly ½ the rates
as in the past
• We observe: stock of migrants was .07 in 1950,
.05 in 1970 (why lower??), .09 in 2000

26. Evidence from NAS Report:
1880-1930
• (see next slide)

30. Migration patterns in the US:
commonplace statements
• We hear: “Migrants contribute to the
excessive growth of US population”
• We observe: Contribution is ½ of what it
was before closing borders in 1915 but
has been on upward trend since 1940

32. Migration patterns in the US:
commonplace statements
• We hear: “Too many old migrants will exert
pressure on Social Security ”
• We observe: Migrants’ age distribution has
remained youthful and is now more so
since there are more children than back in
1910

33. Migration patterns in the US:
commonplace statements
• We hear: “The quality of migrants is lower
than average population in terms of skills
and they are poorer”
• We observe: (from NAS report) “ Available
evidence indicates that skill differences
between native and foreign born workers
through a period of massive migration
were small or non existent; relative quality
of migrants did no fall over time”

34. (cont)
• …the same applies to migration after
1910: the education and skill levels of the
average immigrant is slightly below that of
the native born worker…
• …but, more recently, the inclusion of
illegal migrants may tilt the distribution
toward lower education and lower skills

35. Migration patterns in the US:
commonplace statements
• We hear: “Immigrants increase
unemployment”
• We observe: Their contribution to labor
force is (a) small (b) increase labor force
participation rate and (c) rates of
unemployment lower among immigrant
workers

36. Migration patterns in the US:
commonplace statements
• We hear: “Immigrants lower wage rates for the
rest of the workers”
• We observe: their total impact in an economy as
large as that of the US is small. Furthermore,
traditionally real wages have increased during
periods of massive migration. Finally, available
evidence suggest that low skilled migrants are
not substitutes for native workers but rather than
they fill niches left by native workers (SLMT)

38. NAS report: evidence for most
recent period is virtually unchanged
• On influence on native wages
• On fiscal burden

39. The consequence on countries of origin
(say Mexico) See also slide No 14
• Depletes pool of skilled (unskilled) workers
• Increase K/L ratios thus increasing wage pressure
• Makes populations older
• Increases inflow of foreign currency: this is perhaps the
most influential of all effects. In some cases is massive
• Increases inflow of K and corrections to market
imperfections
• Reduces inequalities between countries?

40. The new immigration: a “putting
out” system through the internet
• Some jobs can be done by low skilled workers located
abroad (low skill jobs): “maquiladoras” for example
• Migrations of bodies may no longer be necessary: K can
migrate chasing low skilled workers
• Some jobs can be done by firms and VERY skilled, but
lower paid, workers abroad (role of internet facilitates
chase of highly skilled workers at lower wages):
• Radiologists
• Computer scientists