Chapter 4 MIGRATION IS FUNDAMENTAL TO ENDING POVERTY. October 31, 2010 By some estimates, there are approximately 12 million people here in this country illegally. Many of them have come here at great risk to their lives and at great cost. They did it to provide for themselves and their families. This is economic migration. It has been going on since the beginning of time. Nomads moved, not to see the sights, but to survive. Our country is populated by people from around the world. They came here for thousands of reasons but mostly to “work” or “seek their fortune.” Plenty left their homes and their families because there was no work. Others left because of famines, natural disasters, wars, oppressive governments and discrimination. Economic migration is an essential part of life itself. People move to improve themselves or find a better life. It is one of the fundamental methods humans use to end their poverty. The economics of migration demonstrates that the freedom to travel helps both migrants and natives. Economists have long since known that free trade of goods throughout the world benefits both sides of each transaction. The exact same theory applies to the movement of labor in the world. Studies by Bob Hamilton and John Whalley estimate that gains from the international free movement of labor would “more than double worldwide real income...”1 Everyone benefits from such increased incomes. The free movement of labor within the United
IGCC Working Paper: The Economic Case for Liberalized Immigration by Howard F. Chang. April 4, 1998. Page 3. 1
States has been economically beneficial to all. The 19th and 20th centuries brought mass migration of rural workers to cities as farming technology changed. Just imagine the level of rural poverty if each state had prevented the free movement of labor. It is explicitly recognized by the European Union that people must be able to move freely among the various member countries for the purpose of employment. If economic migration is so beneficial within the 50 U.S. states and within the EU, it should be no mystery that allowing people to move internationally would be just as beneficial. People move because they believe they can improve their lot. Prior to the imposition of migration restrictions around 1910, the world experienced very substantial migration. For example, at that time “the increase in the size of the labor force due to migration was 21 percent for the United States, 40 percent for Australia and Canada, and 80 percent for Argentina.”2 There were massive wage differentials during the 19th century which lead to this movement of humanity. The wage differential between the U.S. and Ireland was 2:1; between the U.S. and Italy, it was 4:1. But now that numerical immigration restrictions have been imposed in the developed countries, some of the wage differentials are much higher. Between the U.S. and Guatemala, it is 6:1. (United Kingdom/Kenya is 9:1.) Let’s be clear what this means. If someone can move from Guatemala to the United States he can increase his income six times and that is already adjusted for cost of living differences. This is why Lant Pritchett calls economic migration an “irresistible force.” Anyone who can move from a low skill location to a
Lant Pritchett, Let Their People Come, Breaking the Gridlock on Global Labor Mobility, Center for Global Development 2006 P. 23. 2
high skill location will increase their income.3 The desire to improve your life and get out of poverty has been the cause of mass migrations of people throughout history. If you care about poverty around the world, you should therefore care about the freedom to travel and seek your fortune. Although economic migration helps the migrant, the more controversial question concerns the rest of society. Is migration a win-win for everyone? If you were to ask this question of an economist, his answer would involve a discussion of the “marginal value of labor.” Since I’m...
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