Heaven's Swing Door: Endogenous Skills,Migration Networks,and the Effectiveness of Quality‐Selective Immigration Policies

A growing number of OECD countries are leaning toward the adoption of selective immigration policies, which are expected to raise the quality (or education level) of migrants. This view neglects two important dynamic effects: the role of migration networks, which could reduce the quality of migrants, and the responsiveness of education decisions to the prospect of migration. We propose a model of self‐selection into migration with endogenous education choices, which predicts that migration networks and the quality of migrants can be positively associated when destination countries adopt sufficiently selective immigration policies. Empirical evidence, presented as background motivation, suggests that this is indeed the case.     

Does immigration crowd out foreign direct investment inflows? Tradeoff between contemporaneous FDI-immigration substitution and ethnic network externalities

This study examines the dynamic interactions between immigration and inward foreign direct investment (FDI) using bilateral data on these indicators between Japan and each of the 29 countries/economies of origin for both FDI and immigrants into Japan during 1996–2011. Although literature shows a positive FDI–migration relationship, I distinguish between short- and long-term effects of immigration, and show a contemporaneous negative relationship between FDI and immigration. The results show that immigration flows discourage FDI inflows (FDI–migration substitution), although larger immigration stocks induce FDI inflows (ethnic network externalities). Therefore, total effects need to be evaluated considering a tradeoff between contemporaneous substitution and the longer-term complementarity from network effects. While inward FDI promotion and immigration enhancement are often suggested as solutions to resolving shortages in domestic savings and labor, our results have implications for addressing the increasingly daunting policy issue of population aging.     

Efficiency and distributional implications of global restrictions on labour mobility: calculations and policy implications

This paper sets forth a procedure for calculating the annual efficiency gains from alternative changes in existing international immigration restrictions and evaluates the impact of wage rate changes on nonmigrating labor. Data on US gross national product (GNP)/capita across countries are used to infer differences in the marginal productivity both between countries and across major world trading areas. The method assumes that the worldwide labor supply is fixed, that full employment occurs in all regions, and that differences in labor's marginal product across regions arise because of barriers to inward mobility of labor in high-wage countries. When these barriers are removed, labor is assumed to be reallocated and efficiency gains occur. Results of the calculations suggest large gains from the removal of global immigration controls which, in most cases, exceed existing worldwide GNP generated in the presence of labor mobility restrictions. A large portion of the gain is accounted for by labor migration between the aggregated rich and poor countries. Over 40% of the total potential gain is realized when only 10% of the wage differential is eliminated, suggesting that small changes in global migration restrictions have large marginal effects. Wage rates increase in labor-losing regions and decline in labor-receiving regions, dramatizing the incentives for labor unions in high-wage countries to oppose liberalization of immigration restrictions. These results suggest large potential worldwide efficiency gains from a move toward an international labor market free of immigration controls. This issue may be far more important to the North-South debate than a focus on initiatives such as commodity price stabilization, relaxation of trade protection, or increased aid flows.     

A Crook is a Crook … But is He Still a Crook Abroad? On the Effect of Immigration on Destination‐Country Corruption

This paper analyzes the impact of migration on destination‐country corruption levels. Capitalizing on a comprehensive dataset consisting of annual immigration stocks of OECD countries from 207 countries of origin for the period 1984–2008, we explore different channels through which corruption might migrate. We employ different estimation methods using fixed effects and Tobit regressions in order to validate our findings. Moreover, we also address the issue of endogeneity by using the Difference‐Generalized Method of Moments estimator. Independent of the econometric methodology, we consistently find that while general migration has an insignificant effect on the destination country's corruption level, immigration from corruption‐ridden origin countries boosts corruption in the destination country. Our findings provide a more profound understanding of the socioeconomic implications associated with migration flows.     

Developing Countries’ Net-migration: The Impact of Economic Opportunities,Disasters, Conflicts,and Political Instability

We provide regressions for the net immigration flows of developing countries. We show that (i) savings finance emigration and worker remittances serve to make staying rather than migrating possible; (ii) lagged dependent migration flows have a negative sign in the presence of migration stock variables; (iii) stocks of migrants in six OECD countries and in the developing countries have non-linear effects. Some of the non-linear effects of the economic variables vanish if indicators for disasters, conflicts and political instability are taken into account but new ones come in for these latter variables.     

The export effect of immigration into the USA

Much has been written on the connection between migration and international trade. Human history provides important examples of migrations leading to increased trade activity, with perhaps the most well-known example of the ‘Overseas Chinese’. This study investigates the trade-related importance of Chinese and other immigrants into the USA. Previous studies may have underestimated (or overestimated) the relationship between trade and migration with nations treated as featureless plains rather than as varied landscapes. This study contends that an understanding of the immigration–trade relationship can be improved upon by examining the specific pattern and destination of immigration into specific US states. Using state level export data to 28 immigrant source countries in 1993, a strong immigration–trade link is found, reinforcing conclusions made by previous research using country level data. The compelling connection between immigration and trade found in this study and others suggests that future changes to US immigration policies necessitate that their trade effects also be taken into account.     

Immigration and economic growth: do origin and destination matter?

This article assesses the heterogeneous effects of immigration on economic growth depending on both the origin and the destination countries. Following the development of a growth model augmented by human capital of immigrants, we estimate it in a dynamic panel setup using the system-GMM estimator. We find that the growth-enhancing effect of immigration is significantly larger when immigration flows from developed to developing economies than when it does to those that include both developed and developing economies. We interpret these results as evidence of immigrants from developed countries bringing with them their advanced knowledge into the developing countries.     

Disentangling the migration-trade nexus: the pro-trade effects of immigrants and emigrants in the presence of vertical and horizontal product differentiation

This paper presents an exploration of the migration-trade nexus taking the case of Italy by crossing the two dimensions of migration (immigration and emigration) and the two dimensions of intra-industry trade (vertical and horizontal). This empirical strategy proves useful in refining interpretation of econometric results. In general, we find that both immigration and emigration are positively and significantly related to intra-industry trade. However, the magnitude and the statistical significance of the impact of migration on trade vary, depending on the type of trade flows considered (vertical or horizontal), the direction of migration (immigration or emigration) and the partner countries considered (OECD or non-OECD). In particular, we find that immigrants from non-OECD countries have a positive and significant impact on both ‘variety trade’ and ‘quality trade’, while immigrants from OECD countries significantly affect ‘variety trade’ only. Emigrants to non-OECD countries have positive effect only on ‘variety trade’. These findings are largely consistent with predictions deriving from theoretical models of intra-industry trade and from the literature on migration-trade nexus.     

Diasporas

Migration flows are shaped by a complex combination of self-selection and out-selection mechanisms, both of which are affected by the presence of a diaspora abroad. In this paper, we analyze how existing diasporas (the stock of people born in a country and living in another one) affect the size and human-capital structure of current bilateral migration flows. Our analysis exploits a bilateral data set on international migration by educational attainment from 195 countries to 30 OECD countries in 1990 and 2000. Based on simple micro-foundations and controlling for various determinants of migration, we found that diasporas increase migration flows and lower their average educational level. Interestingly, diasporas explain majority of the variability of migration flows and selection. This suggests that, without changing the generosity of family reunion programs, education-based selection rules are likely to have moderate impact. Our results are highly robust to the econometric techniques, accounting for the large proportion of zeros and endogeneity problems.     

Democracy in the neighborhood and foreign direct investment

The determinants of foreign direct investment (FDI) have been extensively studied. Even though there is extensive research in the area, most of it is based on analyzing the effects of host country characteristics on FDI flows, and yet there is little research on how neighboring country characteristics play a role in facilitating FDI flows to host countries. This paper analyzes the association between the democracy level in neighboring countries and FDI flows to host countries. Using bilateral FDI flows from the OECD countries, with a large host country sample, we find that countries surrounded by democratic countries attract higher FDI flows. Furthermore, we find evidence that countries that are surrounded by neighboring countries with good institutions tend themselves to have better institutions, experience lower civil conflict, and have higher political stability and hence indirectly attract higher FDI flows. Our findings suggest that if neighboring countries act in such way as to become more democratic, FDI flows to these countries would be higher since not only does improving the quality of democracy attract more FDI inflows, but also being surrounded by neighboring advanced democratic countries will also lead to higher FDI flows to them.     

International Labor Mobility,Redistribution, and Domestic Political Liberalization

Do international labor flows influence the prospects for democratization both in the countries that export their excess workers and in the countries that import them? This paper argues that emigration should have a positive effect on political liberalization in net source countries because it decreases the amount of redistribution that would occur in a more democratic regime. Conversely, immigration should have a negative effect on political liberalization in net destination countries through the same causal channel: by increasing the amount of redistribution that would occur in a more democratic regime. South Korea and Singapore are considered as illustrative examples, and the paper provides statistical evidence to support the hypothesis that emigration (immigration) has been positively (negatively) related to future political liberalization.     

The Role of Migration in the Variety and Quality of Trade: Evidence from Germany

We explore the migration‐trade nexus in the case of Germany over the period 2000–09, disentangling the two dimensions of intra‐industry trade (vertical and horizontal). We find that immigration is positively and significantly related to intra‐industry trade. However, the magnitude and statistical significance of migration's impact on trade are considerably higher for horizontal intra‐industry trade and increase with the difference in the level of development between Germany and the partner countries. This pattern is consistent with the view that information flows between migrant communities and their country of origin may be more important for consumer goods (where trade in varieties prevails) and that this information effect is more important if trading countries are very different.     

Wish you were here? Quasi-experimental evidence on the effect of education on self-reported attitude toward immigrants

We use European Social Survey and Labour Force Survey data from 2002 to 2012 to estimate the causal effect of years of education on European natives׳ opinion toward immigration, by exploiting the exogenous discontinuity generated by reforms in compulsory education in Europe in the 1940s through the 1990s. Our findings show that higher levels of education lead to a more positive reported attitude toward immigrants. We also investigate the mechanisms behind the effect of education on reported attitudes by evaluating both economic and non-economic channels. We find that higher levels of education place individuals in occupations that are less exposed to the negative effects of migration, although not in sectors/occupations where the share of migrants is necessarily smaller, suggesting that migrants and low-educated natives may be complementary rather than substitutes in the labour market. In addition, education alters values and the cognitive assessment of the role of immigration in host societies, with a positive effect on reported attitude toward diversity and on the assessment of immigration׳s role in host countries. Our findings suggest that education as a policy instrument can increase social cohesion in societies that are subject to large immigration flows.     

Migration,community networks and welfare in neoclassical growth models

This paper proposes a Ramsey-Like model of growth with endogenous migration to study the effects of migration networks on the macroeconomy and welfare of hosting economies. In the model, migration is assumed to be made of two different components: a first, forward-looking component in which the rate of net migration depends on the wage gap between countries; a second, backward-looking component in which in-migration depends on the immigration history of the destination country through the formation of immigrant networking. We find that the model exhibits a unique saddle-path steady-state equilibrium and that introducing pro-immigration policies aimed at enhancing community networks have asymmetric impacts on the welfare level of natives and immigrants that hinge on the relative size of immigrant communities.     

Determinants and dynamics of migration to OECD countries in a three-dimensional panel framework

This paper investigates the determinants of bilateral immigrant flows to 19 OECD countries between 1998 and 2007 from both advanced and developing origin countries. We pay particular attention to dynamics by including both the lagged migrant flow and the migrant stock to capture partial adjustment and network effects. To correct for the dynamic panel data bias of the fixed effects estimator we use a bootstrap algorithm. Our results indicate that immigrants are primarily attracted by better income opportunities and higher growth rates abroad. Also short-run increases in the host country’s employment rate positively affect migration from both advanced and developing countries. High public services, on the other hand, discourage migration from advanced countries but exert a pull on migration from developing sources, in line with the welfare state hypothesis. Finally, we find evidence for both partial adjustment and the presence of strong network effects. This confirms that both should be considered as crucial elements of the migration model and that a correction for their joint inclusion is required.     

International student migration to Germany

The past decades have witnessed an impressive growth of international student mobility. This article presents first empirical evidence on international student migration to Germany, one of the most important destination countries for international students worldwide. While previous research in the field has mainly used data on international trade in educational services, I use a novel approach that analyzes student mobility as a form of migration, using data on international student migrants. An augmented gravity equation is the basis for the theoretical and empirical framework. I also provide extensive sensitivity checks of the empirical results and estimates using both the usual log-linearized and a multiplicative specification of the gravity equation, following recent work by Santos Silva and Tenreyro (Rev Econ Stat 88(4): 641–658, 2006). The results provide evidence for the importance of distance—a familiar result from the empirical migration literature. Unlike for international migration on the whole, the importance of disposable income in the home country does not seem to be too big for students, and student migrant flows from politically unfree countries are significantly lower.     

Trade,aid and migrations: some basic policy issues

The link between trade policy and international migration is explored using data from the United States and Europe. "We conclude that restrictive trade policies in industrialised countries have most likely added to migration pressures. We then turn to the broader question of the effects of income growth in the sending countries on the propensity to migrate. We argue that, in relatively poor countries, an increase in income will be associated with higher migration flows. For middle income countries, however, income growth will lead to lower migrations. In the medium run, therefore, the relationship between development levels, as measured by GDP per capita, and the propensity to migrate follows an inverse-U pattern. Econometric analysis of aggregate migration flows from Southern Europe provides considerable support for such conjecture."     

Immigration and Unemployment*

The wisdom of maintaining high levels of immigration into Australia has been questioned, particularly on the grounds that migration contributes to aggregate unemployment. This paper uses both statistical causality techniques and conventional structural models to investigate the relationship between immigration and unemployment in the post-war period in Australia. The tests find no evidence of any association from migration to unemployment, though there is strong evidence of a significant effect of Australian unemployment on migration. The results indicate that immigration policy should not be dictated by unfounded fears of immigration causing unemployment, at least over the range of previous Australian experience.     

Migrant Networks: Empirical Implications for the Italian Bilateral Trade

A significant number of empirical studies, focusing on different countries, have found a positive link between migration and trade. This paper studies the relationship between emigration, immigration and trade using Italian data. The sample regards 51 foreign trading partners and spans from 1990 to 2005. The results suggest that networks of Italian emigrants in foreign countries boost bilateral trade. The effects of immigrants are weak on exports and negative on imports. Results do not change when cultural and institutional dissimilarities between countries are considered.     

How does immigration affect modes of foreign market access: trade and FDI?

This article presents a study of the effects of immigration on trade and FDI. Our analysis is distinct from previous work because it systematically examines the interactions between immigration, trade and FDI. Previous studies treated FDI–immigration relationships as being independent of the modes of foreign market access. Using bilateral data of Japan and 28 other economies for the period 1996–2011, our analysis shows that FDI inflows become more dominant compared to imports when skilled immigration flows increase and less dominant when unskilled immigration flows increase. The results suggest that the relevant policy instruments as regards the promotion of trade, FDI and immigration should vary depending on economic goals, such as current account balances and labour shortages.