MIGRATION THEORIES AND EVIDENCE: AN ASSESSMENT

Abstract. This paper presents a critical survey of theories of migration, their welfare and policy implications and their empirical relevance. We also develop some extensions to the theory beginning with the Harris and Todaro (HT) model. In particular, the HT model is extended to examine risk averse behaviour within families where the migration of members of families serves to diversify risk. The welfare implications of the individual migration decision and government intervention in the form of employment subsidies are examined. Recent evidence on international migration is presented. It is shown that migration does not flow automatically in response to wage differentials. Characteristics of migrants and the process of self-selection are found to be important determinants of the rate of migration.     

Do States Play Welfare Games?

This paper uses a panel of state-level annual data from 1983 to 1994 for each of the contiguous United States and the District of Columbia, to explore the degree to which states simultaneously set welfare benefits. Using instrumental variables estimation, we find substantial empirical evidence that is supportive of the notion of welfare competition. Furthermore, we find that state responses to neighbor benefit decreases tend to be significantly larger in magnitude as their responses to neighbor benefit increases. Our results, therefore, have potential implications for public policy in the wake of the increased decentralization of welfare policy associated with the welfare reform of 1996.     

The Long-Run Effect of Economic Development Policy on Resident Welfare in a Perfectly Competitive Urban Economy

This paper argues that evaluations of economic development policy must consider the long-run effect on resident welfare. The paper uses comparative static analysis of a closed, urban economy with an explicit labor market, to investigate the effect of policies that stimulate economic activity. The paper finds that such policies do not necessarily raise resident welfare, because of the competition for land between firms and households. On the other hand, the paper does find that income transfers increase resident welfare. This model assumes, however, that the land, capital, and labor markets are perfectly competitive. Therefore, these results are based on the assumption that an urban economy is efficient.     

The Labour Market Effects of Increases in Social Insurance Premium: Evidence from Japan

Exploiting heterogeneous variations in labour cost increases due to Japan's 2003 social insurance premium reform as a natural experiment, we estimate the impacts of the increased social insurance premiums on employment, working hours and payroll costs. Using the difference‐in‐differences method with establishment fixed effects, we find that firms reduce the number of employees and increase average annual earnings from longer working hours in response to an exogenous increase in labour costs without productivity gains. Firms manage to pay for this increase in the average wage paid to the remaining workers by reducing the number of employees to keep total payroll costs unchanged. In contrast, since social insurance premiums are shared equally between employees and employers, firms pay the remaining half premiums that they are imposed with. Sub‐sample analyses show that firms adhering to a labour hoarding policy did fire many workers taking advantage of the 2003 reform. This may indicate that the reform provided a good excuse to cut employment in firms that had been forced to comply with a labour hoarding policy even in an over‐employment situation, which is more likely in sectors and countries where dismissals are rigorously regulated.     

Voting with One's Feet

A bstract . Unemployment on Indian reservations averages close to 45 percent, and welfare in its various forms is a more significant source of income for reservation inhabitants than employment. Given these circumstances and given the very low levels of human capital possessed by the American Indian population, there is reason to expect that higher welfare benefit levels would be attractive to Indian migrants. Based on 1990 Census data, this study empirically finds that, over the 1985–1990 period, American Indians, when making migration decisions, exhibited a strong preference for higher welfare areas. This finding lends support to the Tiebout hypothesis of "voting with one's feet" and provides support as well for the establishment of uniform real welfare levels across states.     

Decentralized Welfare: Will There Be Underprovision?

This paper develops an Asymmetric Nash Equilibrium model of welfare provision by states when the benefit payment is a local public good and a fixed population of welfare recipients distributes itself between states with logistic “migration” function. The model shows that state size is an important demand shifter across states because it alters the supply elasticity of recipients. The model provides estimates of how the degree of benefit under provision varies with this migration elasticity. Other demand instruments (such as taxpayer resources and “generosity”) likewise generate positive correlation between benefits and recipients, while supply shifters generate negative correlation between benefits and recipients. The model's predictions are closely matched empirically, when examining the reduced form impact of these instruments on the pattern of welfare benefits and recipients across states. Using these impacts to assign the instruments to either supply or demand sides of the model, it is possible to estimate the model's structural elasticities. These turn out to be high enough so that simulated solutions to the model generate considerable welfare underprovision and thus raise concern about a race to the bottom with decentralized control over AFDC.     

Labour market institutions and employment in France

The purpose of this paper is to use individual data to study how the minimum wage and the welfare system combine to affect employment in France. Using the 1997 Labour Force Survey, we decompose non‐employment of married women into three components: voluntary, classical (due to the minimum wage) and ‘other’ (a residual category). We find that the minimum wage explains close to 15% of non‐employment for these women and that the disincentive effects of some welfare policy measures may be large. Our approach also allows us to evaluate various labour and welfare policy experiments in their effects on participation and employment. Copyright © 2002 John Wiley & Sons, Ltd.     

Regional growth and interstate migration

The current study examines a simultaneous equation model of interstate migration using income growth, employment growth, unemployment growth, population growth, gross migration, and employment in manufacturing as endogenous variables. The results show that neither the growth of employment nor the growth of income in the destination location has been directly important determinants of migration flow. However, an indirect effect through the population variable can be discerned for these variables, and this has important policy implications. A key feature of this migration model is that it incorporates most of the determinant factors as rates of change over time. The study sheds light on the joint and indirect effects of migration and other endogenous variables and draws some important policy implications pertaining to growth.     

Quasi-structural estimation of a model of childcare choices and child cognitive ability production

This article evaluates the effects of maternal vs. alternative care providers’ time inputs on children’s cognitive development using the sample of single mothers in the National Longitudinal Survey of Youth. To deal with the selection problem created by unobserved heterogeneity of mothers and children, we develop a model of mother’s employment and childcare decisions. We then obtain approximate decision rules for employment and childcare use, and estimate these jointly with the child’s cognitive ability production function. To help identify our selection model, we take advantage of the plausibly exogenous variation in employment and childcare choices of single mothers generated by the variation in welfare rules across states and over time created by the 1996 welfare reform legislation and earlier State waivers.     

Effects of employment protection on worker and job flows: Evidence from the 1990 Italian reform

This paper uses the Italian Social Security employer-employee panel to study the effects of the Italian reform of 1990 on worker and job flows. We exploit the fact that this reform increased unjust dismissal costs for businesses below 15 employees, while leaving dismissal costs unchanged for bigger businesses, to set up a natural experiment research design. We find that the increase in dismissal costs decreased accessions and separations for workers in small relative to large firms, especially in sectors with higher employment volatility, with a negligible impact on net employment. We also find some evidence suggesting that the reform reduced firms' entry rates and employment adjustments, but had no effect on exit rates.     

Environmental degradation,self-protection choices and coordination failures in a North–South evolutionary model

Environmental degradation may lead agents to increase their work effort to replace the consumption of depleted free access environmental goods with that of private substitute goods. The rise in the activity level that follows may further deplete the environment, which in turn increases the production and consumption of substitute goods. Using a North–South evolutionary model, we show that the existence of a coordination failure among interacting heterogeneous agents may lead the economy towards Pareto-dominated attracting stationary states where individuals work and produce “too much” (i.e. more than socially optimal). Finally, we analyse possible welfare effects of transferring the environmental impact of Northern production to the South and show that such a policy may decrease welfare in both hemispheres.     

Welfare migration in Europe

The enlargement of the European Union has increased concerns about the role of generous welfare transfers in attracting migrants. This paper explores the issue of welfare migration across the countries of the pre-enlargement European Union and finds a significant but small effect of the generosity of welfare on migration decisions. This effect, however, is still large enough to distort the distribution of migration flows and, possibly, offset the potential benefits of migration as an inflow of mobile labour into countries with traditionally immobile native workers.     

Trade Liberalization and Poverty in Ecuador: A CGE Macro-Microsimulation Analysis

Cross-country analysis of the aggregate growth-poverty link is likely to miss important country-specific detail and possible offsetting forces in the underlying labour market adjustment process. This paper combines a CGE model analysis with a microsimulations approach to analyse the effects of trade liberalization on poverty and income distribution in Ecuador. The CGE model enables us to disentangle the general equilibrium effects of various trade policy scenarios on sector output, employment, factor incomes and household consumption. However, as is typical of CGE models, this analysis only provides distribution results for fairly aggregated groups of workers and a reduced number of representative households. The microsimulations approach adds the full distribution to the analysis and allows simulation of the effects of trade reform on the job status and remuneration of individual workers and thereby on household income distribution and poverty. The macro- microsimulation results indicate that the trade opening in Ecuador induced mild aggregate welfare gains, but rising income inequality due to rising wage differentials between skilled and unskilled workers implies virtually no poverty-reducing effect from trade liberalization.     

The Politics of Municipal Employment Policy: A Comparative Study of U.S. Cities

A bstract . Municipal employment policy has been partially ignored in urban research , perhaps because of the implicit assumption that employment policy parallels expenditure and taxation policy. However, a strong relationship is found between municipal employment levels and the specified socioeconomic environment. Relationships between that environment and employment policy deviate considerably from expenditure policy. Expenditure policy analysis suggests hypotheses, but does not accurately predict the relative strength of association. Although expenditure policy is more directly related to municipal economic environment, public employment policy is related to the sociopolitical environment.     

中国户口制度改革的理论分析

随着户籍制度改革的深化 ,从完全禁止户口迁移到数量限制政策 ,再到征收费用政策和放开小城镇入户限制的逐步放松户籍管制政策 ,对经济发展的贡献日益增加 ,损害逐渐减轻。我国放开小城镇户籍限制的改革放活了地方经济。我国户籍制度改革进程是由经济内生决定的 ,城市经济发展的需要推进着户籍制度的改革进程。那些放开户籍限制的城市也没有出现人们担心的问题。放开户籍限制不会构成对城市就业、住房、治安、交通的压力 ,反而创造了发展的契机。     

Employment relations in small- and medium-sized enterprises: insights from Ghana

This study examines employment relations in small- and medium-sized enterprises (SMEs) in Ghana. This is done through in-depth case studies of three private firms in the service sector. A review of the extant literature on SMEs revealed a dearth of knowledge on employment relations in SMEs in Africa. Previous research into SMEs in developing countries – and Africa in particular – has focused on economic policy initiatives, problems in raising capital and obstacles to the development of SMEs. In an attempt to fill the gap in the literature, this study uses recruitment, selection and retention, remuneration, discipline and welfare practices to explore the nature of employment relations, the factors that influence and shape them, and the extent of informality involved. The findings cast doubt on the stereotype: small implies/equals informal employment relations in SMEs in Ghana. The study also identifies the factors that influence employment relations and, in addition, reveals that under competitive pressures, SMEs have developed employment relations systems that enable them to have a competitive advantage in their product market/service delivery.     

The subordination of the gender equality objective: the National Reform Programmes and ‘making work pay’ oplicies

The streamlining of the Lisbon strategy has introduced new integrated guidelines for economic policy and employment strategy and a new report format––the National Reform Programme. In the first year of this new reporting mechanism, Member States have paid less attention to gender mainstreaming and gender equality objectives, not least because the gender equality guideline has been removed. Streamlining has further exposed the narrow and instrumental focus on gender equality measures in the Lisbon process as a means of raising the employment rate rather than a broader concern for equal opportunity. This narrow gender equality approach also dilutes the efficacy of the economic and employment policies that are advanced. Some positive steps to advance gender equality continue to be taken, but the reforms are partial, uneven and coexist with negative developments. We illustrate this with an evaluation of the policy trajectory in relation to the ‘making work pay’ agenda for low‐waged workers (tax/benefit reform, minimum wages, childcare and parental leave). We conclude that this latest reform to the Lisbon process has exposed the enormous amount of political work and capacity building that is needed to mainstream gender issues across the whole field of economic, employment and social policies.     

Strategic militancy and the probability of strikes in union-firm bargaining

The paper provides a model that explains the probability of strikes by the union's use of militancy as a strategic tool in bargaining. Militants are useful because they provide a credible threat, hence enhancing the union's bargaining position. Using a multi-stage bargaining game, we show that, in general, militants will be used by the union as a strategic tool. The strategic benefit of militancy is reflected by the fact that the wage and employment level will be higher in a union that uses militants, compared to a union that does not. We use the model to show that the level of militancy and the probability of a strike decrease with the union's power. This suggests that policies that increase the strength of the union will have, at least, a partial positive effect on social welfare. We also show that the model can be viewed as providing an equilibrium of a repeated game, an interpretation that can explain the probability of strikes even in the absence of militants.     

Targeting fertility and female participation through the income tax

We evaluate the effect of a 2003 reform in the Spanish income tax on fertility and the employment of mothers with small children. The reform introduced a tax credit for working mothers with children under the age of three, while also increasing child deductions for all households with children. Theoretically, given the interplay of these two components, the expected effect of the reform is ambiguous on both outcomes. We find that the combined reforms significantly increased both fertility (by almost 5%) and the employment rate of mothers with children under three (by 2%). These effects were more pronounced among less-educated women. In addition, to disentangle the impact of the two reform components, we use an earlier reform that increased child deductions in 1999. We find that the child deductions affect mothers' employment negatively, which implies that the 2003 tax credit would have increased employment even more (up to 5%) in the absence of the change in child deductions.