Is Migration Good for
Development?
How Could You Even Ask?
Lant Pritchett
Harvard Kennedy School
Wellesley College
April 30, 2008
Is Migration Good for
Development?
• Ideas and their evolution: Marx and Foucault
• Spatial Based versus People Based thinking—
why does dirt matter in theories of justice?
• The movement of people leads to development
gains orders of magnitude larger than anything
else on the agenda
• For some places mobility may be the only
development agenda
• Ideas and their evolution: Crazy, Crazy, Crazy,
Obvious
The world that was lost in 1914
He could secure forthwith, if he wished it, cheap and
comfortable means of transit to any country or climate
without passport or other formality, could dispatch his
servant to the neighboring office of a bank for such
supply of the precious metals as might seem convenient,
and could then proceed abroad to foreign quarters,
without knowledge of their religion, language, or
customs, bearing coined wealth upon his person, and
would consider himself greatly aggrieved and much
surprised at the least interference.
JM Keynes
The “second globalization” as farce
Hegel remarks somewhere that all great worldhistoric facts and personages appear, so to
speak, twice. He forgot to add: the first time as
tragedy, the second time as farce. …Men make
their own history, but they do not make it as they
please; they do not make it under self-selected
circumstances, but under circumstances existing
already, given and transmitted from the past.
The tradition of all dead generations weighs like
a nightmare on the brains of the living.
Karl Marx, remarks somewhere
Citations: A battle the French do
win (finally)
160000
140000
140446
124255
120000
Foucault
Bourdieu
Becker
Derrida
Friedman
Samuelson
Pritchett
100000
80000
73038
60000
40000
4244641728
33171
20000
9887
0
Citations
Source: my calculations with “Publish or Perish”
Deconstruction, the most powerful
idea of your time…
• There is no “reason” or “discourse” or “truth” there is just
power
• Power socially constructs reality such that the agenda is
deeply controlled without explicit repressions—it is
“common sense”
• “Deconstruction” is the subversion of the socially
constructions of established discourse
• So, where do we look for overwhelming power? Not to
controversy but for silence…what opposes the truly
powerful is not controversial but just plain crazy
…has yet to tackle nationalism the
most powerful idea of my time…
• God is dead
• All “..isms” are mortally wounded (e.g.
racism, sexism, sexualism)
• “Truth” and “Reason” have retreated into
scare quotes
And the “imagined communities” that are
“nations” are all that is left to believe in
Simple economics—what is the “price
equivalent” of a quota (say, for shoes)
p*(1+τ)
P*
Supply
Demand
Econometrics of wage gaps
The wage gap between
the average wage in
USA (“a”) and the
average wage in Peru
(“d”) combines
differences in average
personal characteristics
(X) and place based
productivity
What is the wage gap of
observationally equivalent workers?
Compare workers born in
Peru, educated for X years in
Peru, working in Peru (d’)
versus workers with the same
characteristics (years of
education, sex, age,
residence) in the USA (c’).
The Place Premium (first cut):
Same worker, different wages
25000
20000
15000
In home
10000
In USA
5000
ngl
ade
sh
Gu
ate
ma
la
sia
Ba
one
Ind
Gh
a
na
0
Ha
iti
Annual eanrings (in PPP)
Estimated wage differences of
observationally equivalent low skill workers
is P$15,000 a year
Simple arithmetic for 35 year old,
male, urban, formal sector, 9
years of schooling:
Wage in Haiti: 80 cents/hr
Wage in USA (o.e.): $8.25 /hr
Annual hours 8hrs/day, 22/days
month, 12 months year:
(8.25-.80)*(8*22*12)=$15,738
Average (of 42 countries):
Wage in foreign: $2.53
Wage in USA: $9.83
Annual wage gap: $15,411
Tricky problem: Peruvians in US are
not here by chance, they are here by
choice and are self-selected
Around any given slice through
the wage profiles on
observables there is a
distribution of wages based
on unobserved (to the
econometrician) characteristics
that affect wages in the home
country—if workers are
“positively selected” then the
mean-mean (peak to peak)
comparison overstates the
wage gain
India
0.6
0.8
Compares means
0.0
0.2
0.4
Could compare to other
percentile of the home
distribution of unobservables,
e.g. 70th
0
5
10
Component plus residual from ln(wage) regression
USA born, USA res, USA educ
IND born, IND res, IND educ
IND born, USA res, USA educ
IND born, USA res, IND educ
15
0.6
0.8
Distribution of the unobserved component on
wages (residuals) in home for migrants and nonmigrants: Mexico
0.0
0.2
0.4
Mean migrant at 53rd
Percentile of non-migrants
0
2
4
6
8
ln(wage)
Migrant in home
Non-migrant in home
10
•
14000.0
12000.0
•
PPP $
10000.0
8000.0
•
6000.0
4000.0
2000.0
0.0
Annual gain, Monthly gain, Net present Annual gain,
micro-credit migration Value, lifetime migration
of micro-credit
The gain from a lifetime of micro
credit is the same as 2.4 weeks
working in the USA
Total annual gain to Grameen
Bank borrowers (around) $30
million
If I get 3,000 additional
Bangladeshi workers into the US,
do I get a Nobel Peace Prize?
Debt Relief…
• Total foregone payments due
to HIPC debt relief in Africa—
about 2.5 billion (in 2005)
• About 150,000 Africans to the
US--.1 percent of the labor
force, about 1 percent of
monthly gross job growth,
about one (good) months net
job growth
• If a labor mobility activist
accomplishes that do they get
to sing at the Super Bowl?
[Picture of Bono here]
Welfare gains, in billions $
From the top of the cliff at the borders
that faces labor you cannot see the
gains from goods or capital
70000
65000
60000
50000
40000
30000
20000
10000
65
109
0
Complete liberalization Complete equalizatoin Complete liberalization
labor mobility
MPK
of goods markets, to
developing countries
Stand the question on its head…
Not “Is Migration Good for Development?”
but, since labor mobility is so good for
proper, people based, measures of
development why is there so much talk
about things that have gains that are so
much smaller?
(Hint: It has something to do with power)
Let’s talk justice, Rawlsian style
Would anyone, behind
a “veil of ignorance”
about where they
would be born agree to
this distribution?
…including the use of
coercion to stop people
from crossing borders
to carry out mutually
beneficial economic
transactions?
Your (USA) tax dollars at work
Good thing we prevented that…
I have never heard that there are
1.3 million “missing Indians”
Total
Number
of births
Developing
Countries
Annual
excess
deaths
(over
OECD
IMR)
IMR
122,266,000
51
5,624,236
Least Developed
29,076,000
84
2,297,004
India
27,119,000
54
1,328,831
Gender gaps and nationality gaps
Nationality gap,
Pakistani boys
versus Rich country
girls
Gender gap,
Pakistani boys
versus Pakistani
girls
But what about its affect on “us(a)”?
• Depends on how you view the sources of crossnational differences in productivity of workers
with the same human capital?
– Is it resources (e.g. Kuwait?)
– Is it capital per worker?
– Is it “A” (factor productivity)?
• If it is A then it is possible that supply creates its
own demand and the net impact on domestic
workers is very small—consistent with all of the
evidence
Who drove down worker wages?
“When after all. It was you and me”
Why am I shoveling
own snow
(with lots of capital?)
Why am I ringing up my
own purchases? (with lots of capita
and technology?
Shift in ideas, silly, controversial,
progressive, then obvious
Attitudes towards Interracial Marriage in the US
Percentage of Population
90
80
70
33% increase in
approval over 4 years
60
50
40
30
20
Percentage of Population
Approving
10
0
Year
1963
MLK assassinated
MLK’s March
on
Washington
1992
LA riots spurred by
tape of Rodney
King beating
Barack Obama
runs for President
of the United
States
Crazy, crazy, crazy…hero