Lecture 10: Globalization & international migration
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Up to this point, relatively quiet about
immigration…we have some sense of it working
in the background.
Our goal for this week is to flesh out
developments outline on the first day—and
alluded to subsequently—in more detail.
In particular, we will interested in the respective
Introduction
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Introduction
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Much of our focus will be on voluntary flows
and their impact on host economies, but must
also consider Transatlantic slave trade.
Why? For one, slave trade may help us explain
large disparities in income observed today.
A recent literature in economics on:
Involuntary flows
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Built on a long-standing precedent of slavery in
much of the Old World, e.g. East Africa to India
and Middle East.
Distinction: harsher conditions, one-sided
relationships, and annual magnitudes of slave
shipments from West Africa to the New World.
Involuntary flows
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As seen before, flows increase over time with:
1.) rising demand for tropical products in OW;
2.) expansion of areas of settlement in NW; and
3.) the inability to further exploit native labor.
Flows centered on Brazil and Caribbean basin
(3/4 of the 10+ million) as margins high and
replacement low.
Involuntary flows
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At the same time, there were voluntary
movements to the New World…followed by
those to Australasia, S. Africa, & Southern Cone.
But these all remained mere trickles until well
into the nineteenth century due to:
1.) the costs of the voyage from Europe;
2.) imperfections in credit markets; and
Voluntary trickles and flows
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As to costs, amounted to ½ year’s wages for an
average worker; positive selection as a result:
generally only skilled and semi-skilled could
finance journey.
As to immature financial markets in Europe,
responses met with only mixed success.
Voluntary trickles and flows
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This option remained somewhat unattractive
given effects on incentives: exploitation on part
of employers and shirking on part of employees.
So the numbers involved remained small with a
peak of 250K in 1640-1700 (versus 750K).
Voluntary trickles and flows
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As to policy, a distinct approach to immigration
policy of English/French and Spanish.
Rather than allowing for the free settlement of
NW dominions, the Spanish were rather
restrictive in their emigration policy.
Voluntary trickles and flows
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Results? Cumulative voluntary immigration to
the NW was 2.6 million in 1820 versus 10+
million forced into the slave trade.
But in 1920, this figure for voluntary
immigration would be 50+ million for all settler
economies (US absorbs 75% of these).
What explains this change?
Voluntary trickles and flows
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1.) The decline in passenger rate in the 19th
century; generated by Pax Brittanica and
application of steam-based transport.
2.) Threshold effects in origin countries.
3.) Mounting population pressures within Europe
and the relaxation of emigration laws.
Voluntary trickles and flows
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At nearly the same time, upwards of 50 million
workers left China and India from the mid- to
late-1800s.
Shared more than a few similarities with
European experience:
1.) Aided by changes in transport technology;
a large drop in passenger rates within Asia
Voluntary trickles and flows
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2.) Workers were attracted to abundant land—
and consequently—higher wages.
As an indication, consider wages in 1870 relative
to those in southern India:
a.) 5x greater in British Guiana
b.) 8x greater in Trinidad
c.) 9x greater in Hawaii
Voluntary trickles and flows
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First, most of these flows were from Old World
to Old World:
1.) Chinese workers to Taiwan/HK/Macao,
Indonesia, Malaysia, & Thailand (78%);
2.) Indian workers to Burma (Myanmar), Sri
Lanka, and Malay peninsula (86%).
Voluntary trickles and flows
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Second, most of these flows—especially those
from India—were organized under indentured
contracts much like those for the early Americas.
Presented all the perverse incentives underlying
the indenture system of the New World.
The industry disappeared by the 1900s
Voluntary trickles and flows
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Third, most of these flows were temporary.
Gross immigration amounted to 30 million for
India and 20 million for China, but net
immigration only around 5 million for each.
Voluntary trickles and flows
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Subject of recent research, but more to be done.
Explaining its rise: A response to the decline in
slavery or the rise in commodity demand and
improving terms-of-trade?
Explaining its fall: A response to exploitative
conditions or was it simply no longer profitable?
Voluntary trickles and flows
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With increasing flows and stocks of immigrants
in the host countries, conflict mounted from the
late nineteenth century.
Flows were generally opposed because of their
depressing effects on wages.
Stocks were generally opposed because of
nativist, ethnic, and racist concerns.
Policy & immigration
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This resentment took a long time to translate into
policy as pressure to end immigration was only
indirectly felt by politicians.
Owners of capital generally in favor whereas
unskilled workers were those with the most to
lose from potential immigration.
Policy & immigration
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Eventually, voting rights were extended and
immigration restrictions were slowly put in place
in the areas of recent settlement:
In the US, Chinese Exclusion Act of 1882;
Literacy Act of 1917.
In Canada, Chinese Head Tax in 1885;
Chinese Immigration Act of 1923.
Policy & immigration
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True end of mass migration dates from the
Immigrant Restriction Act of 1924 by the US.
Lowered the immigrant quota to 165,000
apportioned at a rate of 2% of the foreign-born
by nationality in 1890.
Intent was to promote immigration
Policy & immigration
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Had a profound influence on immigration
experience of other destination countries,
especially Argentina, Australasia, and Canada.
Why? A coordination game with countries trying
to get the most “desirable” immigrants.
US quota lowered to 150,000 per year in 1927
Policy & immigration
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By the 1960s, the percentage of foreign born had
reached its lowest levels for the traditional
destination countries (<5%).
Due to a combination of:
1.) restrictive policies;
2.) geopolitical disruptions;
Policy & immigration
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First, passage of the Immigrant and Nationality
Act of 1964 in the US.
Broke link between quotas and past immigration
and the virtual ban on Asian immigration; also,
provided for family reunifications.
Policy & immigration
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This was to have profound implications for
immigration flows, both in their number and
composition:
1.) World migrant stock rises from 75 million in
1965 to 235 million in 2014 (165 of these in the
OECD), representing 3.3% of global population.
2.) In 1950s, 70% of the (small) stock
Policy & immigration
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Because of this relatively quick transition,
immigration has increasingly become a burning
issue, just as in the 1910s.
Apart from nativist considerations, the concern is
that by increasing the supply of labor downward
pressure is put on wages.
Policy & immigration
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But other forces at work which make
identification of effect of immigration difficult:
1.) the growth of international trade;
2.) technological change that has reduced the
relative demand for unskilled labor; and
Policy & immigration
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Part of the problem is that all of these variables
have evolved together over time.
This has lead researchers to look for large,
external shocks to economies from immigration.
E.g. Muriel boat lift & Miami in 1980;
fall of USSR & Israel in the early 1990s.
Policy & immigration
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Once again, we seem to have returned full circle
in considering the global flows of immigrants.
Much of the history of the 20th century spent
recovering from trauma of interwar period.
Conclusion
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