If you’re keen on development, check out the series of guest posts by job-market candidates at the World Bank’s Development Impact blog. Here’s UC Berkeley’s Teferi Mergo describing his paper on the effects of international migration on source households:
Although international migration can yield large benefits to individual migrants from poor countries, the net impact of migration on the source countries is unclear… In my job market paper, I add to the literature by focusing on migrants from an extremely poor country – Ethiopia – who are randomly assigned the possibility of migration through the United States’ Diversity Visa lottery. My analysis is based on a specially designed survey (which I conducted) of households of previous DV lottery winners and lottery participants in Addis Ababa…
I was able to get only a complete listing of lottery winners… It is not possible to obtain a comparable list of DV lottery applicants from which to identify lottery losers. Fortunately… around 50% of Addis’ households are conservatively estimated to have played the lottery at one time or another, thus allowing me to draw a representative sample of the control group from the city…
The study finds that having a family member win the lottery and migrate has significant positive effects on several dimensions of the remaining family’s standard of living. Families of DV migrants spend about 30% more on food, are thus better fed and have higher body mass indexes. Moreover, families of winners possess more and better quality consumer durables, which include personal computers, modern cooking stoves, household furniture and home entertainment appliances. Having a family member who won the DV lottery also gives families access to improved sources of drinking water and sanitation facilities. Winners’ families, however, have about the same savings and physical capital accumulation as other families. Most of the positive effects of emigration appear to be on the consumption side of the family budget…
A final interesting conclusion is that participants in the DV lottery (both winners and losers) have substantially higher outcomes than non-participants, suggesting that Ethiopian DV migrants are indeed positively selected. Non-participants have lower food spending, lower variety and value of durables they own, and less access to clean drinking water and convenient sanitation facilities. They are also the least likely to use banking facilities and save. Interestingly, however, lottery non-participants spend more on leisure activities.
Wow, that bears repeating: “Around 50% of Addis’ households are conservatively estimated to have played the [US green card] lottery.”
It’s Michael Clemens on labor mobility, so I can recommend it without having read it yet:
Clemens, Michael A.. 2011. “Economics and Emigration: Trillion-Dollar Bills on the Sidewalk?” Journal of Economic Perspectives, 25(3): 83–106.
Abstract: What is the greatest single class of distortions in the global economy? One contender for this title is the tightly binding constraints on emigration from poor countries. Vast numbers of people in low-income countries want to emigrate from those countries but cannot. How large are the economic losses caused by barriers to emigration? Research on this question has been distinguished by its rarity and obscurity, but the few estimates we have should make economists’ jaws hit their desks. The gains to eliminating migration barriers amount to large fractions of world GDP—one or two orders of magnitude larger than the gains from dropping all remaining restrictions on international flows of goods and capital. When it comes to policies that restrict emigration, there appear to be trillion-dollar bills on the sidewalk.
The latest NBER Digest summarizes work by Henrik Kleven, Camille Landais, and Emmanuel Saez documenting how football [soccer] players respond to tax incentives.
[I]n studying teams’ performances from 1980 through 2009, they find that low-tax nations had better teams after Bosman. “This suggests that low-tax countries experienced an improvement of club performances by being better able to attract good foreign players and keep good domestic players at home,” they write.
Their study also looks at the impact of tax reforms in specific countries. For example, in 2004 Spain introduced the so-called “Beckham Law” (named after British superstar David Beckham, who was one of the first footballers to take advantage of it). It allowed nonresidents to be taxed at a flat rate of 24 percent instead of the progressive rate for residents, whose top marginal rate by 2008 stood at 43 percent. After the law, Spain saw its share of foreign players increase while nearby Italy, which had a similar top league, saw its share of foreign talent shrink.
Studying Mexican laborers, Steffen Reinhold and Kevin Thom estimate a substantial return to US work experience, possibly as large as the return to Mexican education.
There is a growing literature assessing the effects of out-migration on the economies of migrant-sending countries. Research on this topic has been dominated by two main strands: one exploring the consequences of skilled migration (the “brain drain”), and one focusing on the determinants and effects of remittances. However, if migration is temporary and migrants eventually return home, there is another channel at work, which we call the skill-upgrading of return migrants. Migrants may be accumulating skills while working abroad that are transferable to the labor markets in their home country. If these individuals eventually move back home, they return as potentially more skilled and productive workers. This paper presents an empirical analysis of this phenomenon among migrants who return to Mexico after spending some time abroad in the United States…
We use data from the Mexican Migrant Project (MMP) and the Mexican Census to document the relationship between past U.S. migration experience and the labor market earnings of return migrants in Mexico. Our baseline specification suggests that there is a 2.7% return to a year of U.S. migration experience in the Mexican labor market. This exceeds the estimated return to age at every point in the life-cycle, and we cannot reject the null hypothesis that this is equal to the return to education…
We find evidence that much of the return to migration can be accounted for by occupation-specific job experience. The return to migration experience is largest for migrants who worked in occupations in the United States that match their current occupation in Mexico. Indeed, the return to a year of this kind of job-relevant migration experience is estimated to be a little less than 5.2% in the whole sample, and as high as 9.3% when restricting the sample to unskilled manufacturing workers. It is noteworthy that our basic estimate of the return to a year of job-relevant migration experience is almost twice as large as our estimate of the return to a year of education…
We also find a greater return to years of documented migration experience, but this seems to be related to the accumulation of relevant job experience. Individuals on documented migratory trips are more likely to find jobs that end up matching their occupation back in Mexico, and there also appears to be a greater return to relevant migration experience if it is accumulated with legal documents…
If job-relevant migration experience is highly rewarded in the Mexican labor market, policymakers interested in encouraging return migration and limiting visa overstaying might wish to design temporary worker programs with the skill-upgrading incentive in mind. For example, programs that allow workers to move between employers and otherwise place less restrictions on job search might allow workers to more easily find jobs similar to those available to them in Mexico.
The authors use a model and several controls to try to address concerns about self-selection amongst migrants and the endogeneity of trip duration; check out the full paper to judge for yourself.
The World Bank’s Manjula Luthria on labor mobility for the poor (pdf):
The Pacific Islands and New Zealand program, known as the Recognised Seasonal Employer (RSE) scheme has been described by the International Labour Organization’s good practices database as a model for other destination countries. The New Zealand Department of Labour (2010) recently concluded that “Overall, the RSE policy has achieved what it set out to do.” The policy provides employers in the horticulture and viticulture industries with access to a reliable and stable workforce, with productivity gains starting to emerge as workers return for another season. The main concerns raised about temporary labor programs have been mitigated: the evaluation finds little displacement of New Zealand workers; almost all workers returned, with overstay rates of about 1 percent in the first season and less than 1 percent in the second; and concerns about worker exploitation have arisen in only a couple of isolated cases. A World Bank evaluation (McKenzie and Gibson 2010) also revealed that the RSE has also lived up to the policy goal of improving development in the Pacific Islands.
Based on this positive record, this note provides general lessons for policy makers who wish to institute similar TMP programs for the poor. These lessons could have wide portability due to the fact that the Pacific–New Zealand program is sizeable by international standards—already reaching one-third the size of Canada’s Seasonal Agricultural Worker Program, which is in its 44th year of operation and considered global best practice thus far. Three broad areas emerge as a priority for policy and operational focus: design, management, and capacity building.
E.R. Tufte probably wouldn’t like this graph, but it conveys a simple message about development interventions:
See David McKenzie’s World Bank blog post and VoxEU column for the story.