Paul Collier
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insurance mechanism, migration enables people to take the risks inherent in raising their longer-term level of income.
If remittances are helpful to those left behind, what migration policies of host countries increase their size? Superficially, it might appear that the answer is simple: increase migration. But easing restrictions on migration can have counterintuitive effects on remittances. An ingenious recent study finds that the easier are the restrictions on migration, the less willing are migrants to send money
back home. 19 The explanation is that in response to easier restrictions migrants bring in more of their relatives, and this reduces their need to send remittances: bringing mother to the host country is an alternative to sending her money. So, paradoxically, remittances to countries of origin can be larger with restrictive than with open migration policies. It might also seem that migrant for migrant, the more educated would remit more than the less educated, so that an educationally selective policy would increase remittances. To an extent this is surely correct: with education earnings rise and so migrants are better able to afford to remit. But beyond a certain level, further education actually reduces remittances. The migrant is less likely to wish to return, his relatives back home are themselves likely to be successful and so less in need of remittances, and the migrant may be able to afford to bring his relatives in, rather than send them money.
In teasing out such effects, somewhat surprisingly the key gap in the evidence turns out to be data on the policies of host countries.
There is as yet no comprehensive quantitatively usable version of the myriad of complex changes in rules and practices, country by country. As a result, testing a theory of how policy affects remittances has to use proxies for policy. For example, one proxy for the restrictiveness of migration policy is whether the country has a formal guest-worker program, since guest workers have no right to
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bring in relatives. Another is the sex ratio of migrants, since this is likely to reflect whether wives and mothers can be brought in.
With these caveats, there is solid evidence that remittances to most countries would be increased were the migration policies of host countries somewhat more restrictive, in the sense of not letting in the relatives of migrants. The effect is quite powerful: not being able to bring in mother makes educated migrants considerably
more generous in their remittances. The educational selectivity of migration policies is somewhat easier to proxy, through whether a country operates a points system. Such systems strongly reduce remittances, suggesting that most countries are beyond the peak of the inverted U that describes the relationship between remittances and education. These results are important because they provide nuance to apparent conflicts of interest between poor people in countries of origin and the indigenous poor of host countries.
While at the margin some forms of migration are likely to reduce remittances, overall the remittances generated by migration have been beneficial and substantial for the people left behind in some of the poorest countries of origin. Like other forms of aid they are not game-changers, but they have helped to relieve poverty.
Does Emigration Ease Overpopulation?
Among the emails I receive from readers of The Bottom Billion, the most common criticism is that I neglected to discuss population growth as a cause of poverty. If population growth is harmful to the poorest countries, then migration should be helpful: there are fewer people among whom to share the national cake. So are fewer people a good thing for poor societies? The clearest beneficial effect should be in the labor market: with fewer workers competing for jobs, the earnings of those who stay at home should be higher. The effect of
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emigration on the earnings of those left behind has only recently been well investigated. One such study, by one of my students, Dan Brown, is for Jamaica. He has estimated how wages have changed as a result of emigration. For example, if 10 percent of the skilled labor of a particular age cohort migrates, by how many percent does the wage for remaining workers rise? His results were typical of such studies, being in the vicinity of 4 percent.
This suggests that the effect of emigration on the wages of people left behind is benign but rather modest. Further, this effect is only within a skill category. If educated workers become scarcer, this also has implications for the wages of uneducated workers. Skilled workers enhance the productivity of unskilled workers, so that a loss of skilled workers reduces the wages of the unskilled. Indeed, you may recognize this as the obverse of the effect of immigration on host populations: skilled immigrants boost the earnings of unskilled workers. So as the skilled emigrate from countries of origin, they become scarcer and increase the wage premium for skill, while the unskilled have fewer skilled people with whom to work and so are less productive.
Transferring fairy godmothers from poor societies to rich ones may be nice for the fairy godmothers and for the people they help in rich societies, but it is a stretch to present it as a triumph of social justice.
The greater inequality resulting in poor countries from the deepened scarcity of the skilled is compounded by an elite layer of returned highly skilled migrants who command international salaries. Because wages at the bottom are so low, the extent of social inequality generated by these differences in productivity is staggering; greater even than the wildest excesses of corporate America.
More generally, I did not discuss population growth as one of the problems for the bottom billion because I do not believe that it is inevitably a serious problem. Other than in a few cases such as Bangladesh, these countries are not intrinsically overpopulated. Often,
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on the contrary, they still have rather low population densities so that public goods are spread very thin. A natural experiment in addressing overpopulation by emigration is nineteenth-century Ireland. The population of Ireland rocketed up with the introduction of the potato, until 1845 when the potato crop was disastrously blighted. Over the next century Ireland lost half its population to emigration but remained chronically poor by European standards.
Any favorable labor market effects of this massive emigration, far in excess of anything that could be conceived from countries of origin nowadays, were evidently pretty modest. Eventually, the huge
diaspora generated by 150 years of mass emigration has become a substantial asset for Ireland. For example, the Irish American lobby in the US Congress has ensured that American companies that
invest in Ireland get especially favorably treated by the US tax system. But 150 years is quite a long time to wait.
So emigration as a counter to overpopulation is not an important way in which those left behind can benefit. The scale of population loss is trivial, it draws off precisely those people who are most needed, and the effects on the productivity of the remaining workforce are ambiguous.
The most important counter to the Malthusian pressures of overpopulation is not migration from increasingly land-scarce rural regions to the cities of the developed economies but migration to cities within the country. A particularly convincing study of the benefits of such movements tracked migrants from rural area of Tanzania over the period 1991–2004, recording the incomes of both the migrants and the people who stayed put. 20 The gains from migration to Tanzanian towns and cities were dramatic, averaging an increase in consumption of thirty-six percentage points. Overall, migration accounted for around half of the entire reduction in rural poverty.
Cities work by reaping scale economies that make ordinary people
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more productive than is possible if they remain dispersed. 21 Whereas in agriculture high population density results in poverty, in cities high density is the handmaiden of prosperity. Paradoxically, the same people who are most supportive of migration from poor countries to rich ones are often most hostile to migration of the rural poor to citie
s within their own country. It is as if peasants should be preserved in aspic in their rural idylls. Mass emigration from impoverished rural areas is essential if the remaining population is to achieve prosperity: the amount of land per person has to be substantially increased. So it is vital that cities perform their function of raising the productivity of the rural migrants who arrive in them.
Some of the conditions that determine whether cities succeed in this function are determined at the level of the nation, but others are determined by the city itself. Some cities provide much more effective ladders for migrants than others. Issues of zoning and local
transport can make a major difference. 22 Although Paris is a high-productivity city, the suburbs in which migrants from rural areas of poor countries were encouraged to congregate have been dysfunctional. They are zoned so as to permit only residential uses yet have very poor transport connectivity to centers of employment. In contrast, cities such as Istanbul have attracted migrants to districts in which high-density residence and enterprise are intermingled. The same intermingling occurs in the typical African city, but there settlement has been so informal that people have not invested in mul-tistory housing. As a result, although African shanty towns appear stiflingly crowded, they are not in fact high density. This diffusion spills over into fewer opportunities for enterprise: density breeds prosperity by concentrating demand and thereby enabling specialist firms to find a market. So migration is indeed decisive for countering overpopulation in the bottom billion but not for migration to high-income countries.
CHAPTER 10
Left Behind?
WE HAVE NOW REVIEWED all the various channels by
which migration is likely to affect those left behind in poor countries. What does it add up to? The political effects of migration appear to be modestly beneficial, although the evidence is only just starting to flow in. The economic effects are dominated by the brain drain and remittances. Globally, brain drain is a misleading label: the possibility of migration stimulates the supply of talent rather than draining away a fixed stock. But for the countries around the bottom of the world economy, that draining away is a reality. For these same countries, however, earnings from work abroad provide a lifeline: remittances cushion desperately difficult living conditions. For most countries, the benefits of remittances are likely to outweigh the loss of talent, so the net economic effects are also modestly beneficial.
We can therefore safely conclude that migration is good for those left behind. But in fact, that conclusion is an answer to the wrong
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question. The pertinent question is not whether migration harms or benefits countries of origin, but whether faster migration would harm or benefit them. The practical policy issue is whether the continuing acceleration of migration from poor countries would be better for them than were the governments of host countries to introduce effective controls. It is this that needs to be evaluated from the perspective of those left behind, not the overall effects of migration. If you are thinking that this distinction is a pedantic quibble, then flip back through part 4 and think again. The distinction I am making, which is fundamental to much economic analysis, is between the total effect of migration and its marginal effect.
That the total effect is positive tells us precisely nothing about the marginal effect.
However, from the path of the total effect we can deduce the marginal effect. In Figure 10.1 the solid line shows the path of the brain gain/drain for different rates of migration. We know, for example, that China and India, with low rates of migration, get a large brain gain, whereas Haiti, with a far higher rate of migration, suffers a brain drain. The dashed line deduces the marginal contribution of migration. As a matter of simple logic, when the gain is at its peak, a small change in migration makes no difference: expressed more fancily, the marginal effect is zero. Once the gain is declining, extra migration must be making things worse, so the marginal effect is negative.
Clearly, the ideal migration rate from the perspective of those left behind is when the brain gain is at its peak. Haiti is evidently way beyond that peak: we can safely conclude that on the criterion of the brain gain/drain, its actual rate of migration has been far in excess of its ideal rate. With a much lower rate of migration Haiti would have turned a brain drain into a brain gain, like China and India.
The total and marginal effects of migration on remittances can be analyzed in the same way and are illustrated in Figure 10.2.
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Brain
Gain
Rate of Migration
Haiti
China
India
Total
Marginal
Brain
Drain
Figure 10.1 Migration and the Brain Drain/Gain
Clearly, unlike the brain drain/gain, except in rare instances remittances have positive total effects. The only case I have come across in which migration has reached the point at which remittances are taking money out from those left behind instead of bringing it in is South Sudan. During the war, skilled people left with their families. Postconflict, they are highly reluctant to return and can only be induced if the government pays high wages for the skills it needs. Even then, those who come back to work leave their families abroad and so send remittances back to them. Hence the paradox that one of the poorest countries in the world is making net remittances to some of the richest.
However, although remittances are normally substantial, they also have a peak beyond which further migration becomes counterpro-ductive. If the door is opened too wide, migrants bring their relatives through it rather than sending remittances to them. A similar peak
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Positive
Remittances
Total
Rate of Migration
Negative
Marginal
Remittances
Figure 10.2 Migration and Remittances
applies to the skill level of migrants. Further, there is solid empirical evidence that most poor countries of origin are firmly beyond the point at which remittances are at their peak. While without migration there would obviously have been no remittances, at the margin these countries would get even more remittances were migration more restrictive, most especially in limiting the rights of educated migrants to bring in their families.
So the implication is that while migration is helping those left behind, it would help them even more if there was less of it. But countries of origin cannot control emigration themselves: the rate is determined by the policies of host countries. The polemical debate, migration is good versus migration is bad, makes it much harder to frame an ideal policy: not a door that is open or closed, but one that is ajar.
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Lifelines keep people going, but they do not transform lives. Migration from overpopulated rural areas is, ultimately, the big engine of development. But the decisive flows of migration are not to the cities of the high-income countries, but to the cities of the low-income countries themselves. A country such as Turkey, which has lifted itself out of poverty over the last half-century, has done so not by sending two million Turks to Germany: relative to the ninety million people remaining in Turkey this was trivial, and you may recall that those German Turks are among the least generous remitters in the world.
Turkey’s economic miracle has been driven by the migration of its rural poor to Istanbul, in turn attracted by the growth of opportunities.
The most likely role of international migration as a catalyst is as a transmission channel for ideas. Having a diaspora exposed to societies where the social model is more functional might fast-track the absorption of the ideas that make a difference. But there is little evidence to suggest that resident diasporas, as opposed to temporary student migrants, are important. While ideas matter, in each of the major instances of transformation discussed in chapter 2—
eastern Europe, southern Europe, and the Arab Sp
ring—diasporas were incidental to their transmission. Indeed, although diasporas are often politically engaged, they tend to be backward-looking, massaging old sectarian grievances as a way of preserving their distinctive identities in the host society, rather than being the ambassadors for the characteristics that, ultimately, have induced them to migrate. Further, institutions cannot be transferred lock, stock, and barrel. Societies are highly idiosyncratic, and so to be functional, institutions need to be organic. Even the superficially similar
“Anglo-Saxon” societies—the United States, Britain, Australia, and New Zealand—have substantial differences in their political and economic institutions. Successful institutions come to fit with a society, albeit bearing a family resemblance to an international
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model, rather than being transplanted: transplants tend to be rejected. So the resident population of a society may be better placed than the diaspora to absorb and apply ideas. It is able to download the international models it learns of through the Internet and through a spell of education abroad, but it has its finger on the pulse of how its own society is evolving and so can develop viable domestic institutions. In contrast, a diaspora is at once too close to the host society to distill the big picture and too distant from its society of origin, which it recalls in nostalgic fantasies.
Even where diasporas are forward-looking rather than mired in the past, they have increasingly become redundant as vehicles for ideas. Technology has shrunk distance without the need for physical movement: young people in Egypt downloaded material from