Paul Collier

by Exodus; How Migration is Changing Our World (2013) (pdf)

  CHAPTER 7

  Migrants

  The Losers from Migration

  NOW IT IS TIME FOR THE SURPRISING STAGE: why are migrants also the big losers from migration? The answer is that those who have already migrated lose, at least in economic terms, from the subsequent migration of others. They lose because the argument that migrants compete with low-wage indigenous labor, which I reviewed and substantially dismissed in chapter 4, contains a grain of truth. Migrants seldom compete head-to-head with indigenous workers, because, through a combination of tacit knowledge, accumulated experience, and discrimination, indigenous workers have a substantial advantage over migrants. Migrants compete head-to-head not with low-skill indigenous workers but with each other.

  Migrants are not in close competition with indigenous workers, even in respect to those indigenous workers who have a similar

  level of education. 1 The indigenous advantage may be that they have better command of the language or that their greater tacit knowledge of social conventions makes them more productive.

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  Or it may be because employers discriminate against immigrant workers. Whatever is the explanation, the upshot is that immigrants form a distinct category of worker. Additional immigrants therefore drive down the earnings of existing immigrants. This is, indeed, the only clearly established substantial effect of immigration on wages. As I discussed in chapter 4, the effects of immigration on the wages of indigenous workers vary between being very small losses and modest gains. If immigration policy were to be set by its effects upon wages, the only interest group bothering to campaign for tighter restrictions should be immigrants.

  The individual behavior of immigrants evidently belies this interest: immigrants typically devote considerable effort to trying to get visas for their relatives. But these two interests are not inconsistent.

  An immigrant who enables a relative to join her benefits from the resulting companionship, the kudos, and the peace of mind that her obligations have been fulfilled. The increased competition in the jobs market generated by the extra migrant is suffered by other immigrants. In effect, a tightening of immigration restrictions would be a public good for the existing immigrant community as a whole, whereas assisting the immigration of a relative is in the private interest of each immigrant individually.

  There may be further social reasons why the existing stock of immigrants has an interest in tighter restrictions. Social trust may decline as the size of immigrant populations increases. The size of the immigrant stock also affects attitudes of the indigenous population toward immigrants: contrary to the hope that exposure increases tolerance, the opposite appears to happen. The indigenous population is more tolerant of low numbers than of high numbers. Intolerance is a public bad suffered by immigrants as a whole, which is thus inadvertently generated by the individually maximizing migration decisions of each successive migrant. Heightened

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  intolerance is a consequence of these decisions that is not taken into account by individual migrants but may cumulatively severely affect the existing stock of migrants.

  Hence, we arrive at the paradox of migration. Individual migrants succeed in capturing the huge productivity gains from migration.

  But migrants collectively have an interest in precisely what individually is most detrimental: entry barriers.

  Migrants capture the lion’s share of the large productivity gain from migration, and this handsomely repays the initial investment in the costs of the journey. But are there any continuing costs of being an immigrant in a culturally somewhat alien environment? As with the net effect on host populations, data permitting, we can use happiness as an integrating measure of economic gains and social costs. Whether happiness is a good measure of well-being is currently controversial. Research finds that above a modest income threshold increases in income do not generate sustained increases in happiness, although they do have transient effects: if you win the lottery you feel happier. But the warm glow fades away after a few months. If we apply this to migration, for the typical migrant from a low-income country to a high-income country, the income gain is overkill. Income increases from well below the threshold to well above it. According to the economics of happiness, the first few thousand dollars would increase happiness, but the remainder

  would be slack. Above the threshold by far the most powerful

  determinants of happiness appear to be social: marriage, children, and friends are the stuff of happiness, not the size of a paycheck.

  Migration has clear effects on these social characteristics, but they are negative. Families are separated, and the migrant spends his life in a culturally alien environment. He may tune in to the radio from his home country, surround himself with friends from the diaspora, and return home annually, but day by day the absence from home

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  may tend to make him less happy. If we accept that happiness is a usable proxy for the quality of life, a convenient feature for our purposes is that it subsumes both the effect of higher income and any nonmonetary psychological costs: it gives us the net effect of opposing forces.

  However, happiness is not the only alternative to income as a measure of well-being. An approach favored by some economists is the “ladder of life” in which people are asked to imagine on a ten-point scale the worst possible life and the best, and then place themselves on this scale. 2 This produces self-reported estimates of well-being that more consistently increase with the level of income, so we cannot necessarily conclude that migration provides an income gain that is overkill in terms of well-being.

  Potentially, both happiness and the ladder of life can be used to address the question of whether migration increases the well-being of migrants. There is already a large academic literature that purports to measure these effects, but unfortunately the methods used are not up to the demanding requirements for reliable results. For example, several studies show that migrants tend to be less happy than the indigenous host population. But a leap of faith is then required to infer from this that migration has made people less happy than they otherwise would have been: there is no reason to expect that prior to migrating they were as happy as the host population. I have found only two studies that deploy methods that get around such pitfalls in research. Both are very recent and as yet unpublished, implying that they have not yet been through the rigors of an academic refereeing process. They are, however, as far as I can determine, all that we have got by way of reasonably reliable international evidence on this intriguing question.

  The first study considers migration from Tonga to New Zealand. 3

  Its research design takes advantage of an entry scheme introduced

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  by the government of New Zealand entitled the Pacific Access Category. The key feature of this scheme was that it was run as a lottery and so granted and refused access to applicants from Tonga on a random basis. Such natural randomization is hugely convenient for researchers. By combining it with some sophisticated techniques, the researchers were able to overcome the pitfalls that have tripped up other studies. Because winning is random, the lottery winners as a group should not differ much from the lottery losers. Hence, following their migration the lottery winners can be compared with the lottery losers, and any new differences between them can reasonably be attributed to the fact that the winners have migrated.

  Tonga is fairly representative of many poor countries—income is around $3,700 per head, whereas average income in New Zealand is over $27,000. So the winners of the migration lottery also meta-phorically won a financial lottery. Unsurprisingly, this showed up in the data: four years after migrating, the lottery winners had increased their incomes by nearly 400 percent. But the interest of the study is that it carefully measured the effects both on happiness and on the ladder of life. One year after migrating, there were no significant effects on either. After four year
s there were still no effects on the ladder of life, but people had become significantly less

  happy, by 0.8 points on a five-point scale. 4

  Before considering the implications of this study, let me describe the other one that tracks migrants from villages to cities within India. It, too, investigates how their well-being changed relative to

  a nearly identical group of people who had stayed behind. 5 This

  study compared how migrants perceived their current and past

  well-being with the assessments of other members of the household who had remained in the village. By construction of the sample, they had shared the same life prior to migration. While this research design is strong, since its context is migration within India, it is far

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  from an ideal guide to international migration, where both the income change and the cultural change are much larger. It should, however, provide some indication of what effects are to be expected.

  As with the migration from Tonga to New Zealand, rural-to-urban migrants in India substantially increased their income. Consumption rose by an average of around 22 percent. This was, of course, very much less than the gain from international migration, but even that 22 percent gain from the low level of rural incomes should raise people’s well-being as measured by the ladder of life, which was the researchers’ chosen metric. Both types of migration incur a degree of social dislocation, but just as the income gain from moving to a city within a poor country is much less than that from moving from the same village to a city in a high-income country, so is the dislocation. The migrant moving from the village to the city within India suffers the shock of the urban and the separation from family, but not the dislocation of an alien culture. So, without claiming that the context can be extrapolated to international migration, it should constitute a halfway house. As with the Tongan study, this one finds that migrants place themselves no higher on the ladder of life than their siblings who stayed behind. Their higher income comes at the price of cultural dislocation, manifested by strong nostalgia for their former village life. An implication is their migration incurs a substantial hidden cost that offsets the readily apparent gain in income.

  That, as far as I can tell, is currently the sum total of rigorous studies of the effect of poor-to-better-off migration on the quality of life. As with the impact of migration on the happiness of host populations, it is breathtakingly inadequate relative to the importance of the question. Manifestly, these studies do not permit us to draw any strong conclusions. Nor, however, do they permit us to dismiss them simply because they are inconvenient for our prejudices. Refer

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  back to the important messages from the work of Jonathan Haidt and Daniel Kahneman: resist the temptation to let your moral tastes override cautious and effortful reasoning.

  A tentative inference from these studies is that migrants incur substantial psychological costs that may be broadly commensurate with their large economic gains. The implications of this inference may appear to be far-reaching. The massive productivity gains from migration that so excite economists and that migrants capture appear not to translate into additional well-being. Migration does not deliver the anticipated free lunch, or rather the free lunch comes at the price of indigestion. But these implications themselves need to be qualified. Even if the psychological costs of migration turn out more generally to be consistent with these initial studies, migration might nevertheless eventually raise well-being. In the case of rural-to-urban migration within the same country, a reasonable presumption is that the children of migrants grow up without the nostalgia of their parents: for them the city is home. This second generation and subsequent ones not only have higher incomes than they would have had their parents remained in the village, but, since they themselves do not suffer offsetting psychological costs, they are also happier than they would be had their parents stayed in the village.

  Rural-urban migration thus conforms to the nineteenth-century narrative that migrants move for the benefit of their children rather than themselves. Urbanization is essential for opening the opportunities that enable the mass escape from poverty. The psychological costs borne by migrants may well be enormous, wiping out the

  income gains that accrue to them, but they are unavoidable costs of progress and so have the status of investments.

  But for international migration from poor to rich countries, both the income gain and the cultural dislocation are an order of magnitude greater than those of rural-urban migration. Whether the

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  psychological costs are for a single generation or persist depends upon whether subsequent generations feel at home or continue to feel dislocated. Whereas the costs of rural-urban migration are highly unlikely to persist beyond the first generation, in some situations the descendants of migrants might continue to feel alien. In the worst-case scenario, continuing psychological costs would offset the gains for several generations: migration would not be an investment, it would be a mistake.

  PART 4

  Those Left Behind

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  CHAPTER 8

  The Political Consequences

  MY WORKING LIFE HAS BEEN FOCUSED ON COUNTRIES that

  have largely missed out on rising global prosperity: the countries of the bottom billion. My original motivation for writing this book was to try to answer the question of how important migration is for these countries—that is, how it affects not migrants themselves, but the people left behind in their countries of origin. In any calculus of the overall benefits and costs of migration, the impact on the billion people who remain in countries that for decades have offered little hope of escape from poverty should be given a significant weight.

  The miracle of economic prosperity is at source about social models: the fortuitous combination of institutions, narratives, norms, and organizations that in the eighteenth century began to lift Britain, and subsequently many other countries, out of the poverty that had persisted for millennia. Ultimately, the effect of migration on conditions in the bottom billion depends upon how it affects the social models prevalent in these countries. A critical aspect of the social

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  model, recently emphasized by Acemoglu and Robinson (2011), is the shift in political power from extractive elites to more inclusive government that empowers the productive. So the opening chapter of this part focuses on the effects of migration on the politics of countries of origin, rather than the more conventional concern with brain drain and remittances, which I deal with in the next chapter.

  Does Emigration Generate Pressure for Better Governance?

  In Fiji emigration has been skewed toward the ethnic minority Indian population. This is one typical political effect: minorities are more likely to emigrate than those from the majority group. This feeds back onto the political economy of the country of origin in distinct ways. If people can escape from discrimination and persecution, then such vicious but tempting strategies may become less attractive for repressive governments. By providing minorities with an alternative, the migration option thereby improves their bargain-ing power and makes migration less necessary. However, some

  governments may actually want their minorities to leave, in which case migration would encourage them to adopt discriminatory

  policies. Quite aside from the feedback onto government policies toward minorities, the emigration of minorities will gradually change the composition of the society. How this affects those left behind depends upon how well the society copes with diversity.

  The same migration that increases social diversity in host countries reduces it in countries of origin. So, whatever the implications of the increase in diversity for host societies, the effects are likely to be the opposite in countries of origin.

  While the disproportionate emigration of minorities may have

  political costs o
r benefits for those left behind, the more important effects are likely to come from the political behavior of diasporas.

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  Diasporas may be latent assets, yet many governments of countries of origin regard them as latent dangers. Diasporas are breeding grounds for political opposition: dissidents can find a safe haven, money can be raised to support opposition parties, and ideas and examples can become influential.

  Many of the governments of countries of origin should indeed be threatened by their diasporas. After all, a key reason that some countries remain very poor is that they have not developed functioning democratic institutions, including accountability to electorates, respect for the rights of minorities and individuals, the rule of law, and checks and balances on arbitrary power. Many polities that have the superficial appurtenances of a proper democracy, such as contested elections and political parties, are in fact a sham.

  As a result, these countries continue to be misgoverned. Once living in high-income host countries, migrants can see what decent governance looks like, they know that their countries of origin lack it, and they want to pressure for change. To my mind the key issue for migration is whether this pressure is effective. But it is easier to pose this question than to answer it.

  A famous early analysis of development by Albert Hirschman

  captures the essence of the ambiguity. He categorized the options

  facing those suffering from poor governance as “voice or exit.” 1 People can protest, or they can get out. Migration is the ultimate exit option, and so it directly reduces voice—the domestic expression of opposition to poor governance. However, at the same time, an engaged diaspora can make that depleted domestic voice more

  effective.

  A common way of expressing the direct effect of exit is that

  migration of the talented young provides bad regimes with a safety value: those who remain are self-selected to be more quiescent. Diasporas may kick and scream, but bad regimes may be able safely to