The economics of the "to and fro" migrant: some welfare-theoretical considerations

The effects of international "to and fro" migration on the economic welfare of the migrants and the nonmigrants in the host and home countries are examined. A "to and fro" migrant is defined as a worker who changes residence from origin to destination without any systematic tendency to remain in any of the two permanently. The study is based on the theoretical framework developed by Krauss. The results indicate that "(to and fro) emigration from a source country to a recipient country increases the economic welfare of the migrants and the nonmigrants residing in the host country, but it tends to decrease the welfare of the nonmigrants residing in the source country. In general, the migration also tends to be pareto optimal from a world point of view."     

The income distribution frontier and taxation of migrants

The output distribution frontier, which traces out the economy's output and income distribution options, is used to confirm and explain intuitively the Bhagwati—Hamada results on the taxation of migrants from LDCs by their native country. It is shown that freedom of migration without taxation may reduce the welfare of those who remain in the LDC, but that taxation and free migration can be superior for them to either prevention of migration or freedom of migration without taxation. An externalities argument shows why even migrants may benefit.     

International migration,transfer of norms and home country fertility

This paper examines the relationship between international migration and source country fertility. The impact of international migration on source country fertility may have a number of causes, including a transfer of destination countries' fertility norms. We provide a rigorous test of the diffusion of fertility norms using highly detailed original data on migration. Our results provide evidence of a significant transfer of destination countries' fertility norms from migrants to their country of origin: a 1% decrease (increase) in the fertility norm to which migrants are exposed reduces (raises) home country fertility by about 0.3%. JEL classification: J13, J61, O11     

Temporary Migration and the Flow of Savings to the Source Country

The saving behavior of temporary migrants when the duration of their stay abroad is set by the immigration policy of the host country is studied in this paper. The focus is on the implied flow of savings back to the source country and how it depends on migration costs, duration of the work permit, and international wage, interest and price‐level differentials. The amount of time that migrants are allowed to work in the host country is shown to be a key policy variable that affects the flow of savings repatriated to the source country.     

Income maximization and the selection and sorting of international migrants

Two prominent features of international labor movements are that the more educated are more likely to emigrate (positive selection) and more educated migrants are more likely to settle in destination countries with high rewards to skill (positive sorting). Using data on emigrant stocks by schooling level and source country in OECD destinations, we find that a simple model of income maximization can account for both phenomena. Results on selection show that migrants for a source-destination pair are more educated relative to non-migrants the larger is the absolute skill-related difference in earnings between the destination country and the source. Results on sorting indicate that the relative stock of more educated migrants in a destination is increasing in the absolute earnings difference between high and low-skilled workers. We use our framework to compare alternative specifications of international migration, estimate the magnitude of migration costs by source-destination pair, and assess the contribution of wage differences to how migrants sort themselves across destination countries.     

Migration,trade and spillover effects

This paper identifies a new channel through which migrants can affect the import demand of goods in the host country. In migrating from origin to destination country, migrants observe a change in the price of the bundle of consumable goods. In particular, the migration decision can imply a reduction in the price of imported goods for the consumption bundle of migrants: emigration towards less (tariff) protected countries allows the consumption of products that were prohibitively protected in the origin countries of migrants. To test this channel we estimate the import demand effect of migrant groups coming from third high (tariff) protected countries. Our empirical results strongly confirm this channel and suggest a new perspective about how migration can affect welfare and trade in destination countries.     

Emigration and welfare in an economy with foreign capital

Discussion of the brain drain problem in the 1970s sparked considerable theoretical research upon the effects of emigration. In many cases, it has been determined that emigration reduces the level of welfare of the remaining residents in the source country, regardless of whether or not human capital is exported. In an economy producing traded and non-traded goods. Rivera-Batiz demonstrated that the level of welfare of the remaining residents declines as a consequence of emigration or at most remains unchanged. This paper generalizes the Rivera-Batiz model in another direction to examine the effects of emigration upon the welfare of remaining residents when foreign capital is employed in the economy. In contrast to other earlier studies, it is found that emigration improves the welfare of remaining residents if both they and the migrants have identical preferences and factor endowments. The author also compares the welfare implications of remittance flows back to the source country when they are used to finance consumption and when they are used to finance capital accumulation.     

Barriers to immigration and the dynamics of emigration

In a dynamic model of emigration and return migration I examine the role of migration costs in the process of capital accumulation of the source country. Every migration attempt reduces the amount of savings available for capital accumulation. It contributes, however, to an increase in the per-capita capital stock of the source country if the migrants leave some of their capital behind or decide to return and repatriate accumulated savings. The interaction among these flows governs the evolution of the economy’s capital stock and factor rewards, which in turn affects the decisions to emigrate and return migrate. Both the quantitative and qualitative effects of host-country policies and other disturbances on the key macroeconomic variables of the source country are found to depend on the level of migration costs.     

The selection of migrants and returnees in Romania

This paper uses census and survey data to identify the wage earning ability and the selection of recent Romanian migrants and returnees on observable characteristics. We construct measures of selection across skill groups and estimate the average and the skill‐specific premium for migration and return for three typical destinations of Romanian migrants after 1990. Once we account for migration costs, we find evidence that the selection and sorting of migrants are driven by different returns to skills in countries of destination. Our identification strategy for the effects of work experience abroad permits a cautious causal interpretation of the premium to return migration. This premium increases with migrants' skills and drives the positive selection of returnees relative to non‐migrants. Based on the compatibility of the results with rationality in the migration decisions, we simulate a rational‐agent model of education, migration and return. Our results suggest that for a source country like Romania relatively high rates of temporary migration might have positive long‐run effects on average skills and wages.     

ILLEGAL MIGRANTS, TOURISM AND WELFARE: A TRADE THEORETIC APPROACH

Abstract.  Many countries receive illegal migrants but are reluctant to accept them due to possible negative externalities. We provide a rationale for not policing illegal migration by linking it to the tourism industry. By paying illegal migrants less than local workers, the relative price of the non-traded goods is shown to be lower than it would be in the absence of such workers. An expansion in tourist trade, under certain intensity conditions, necessarily raises resident welfare and employment. This tourist boom necessarily lowers the welfare of the illegal migrants. It is established that an increase in tourism increases the supply of illegal migrants.     

On a Variation in the Economic Performance of Migrants by their Home Country’s Wage

Although the economic performance of migrants in the receiving country undoubtedly depends on qualifications, it is also affected by inclinations. Given the probability of return migration, a behavioural link is established between the incentive of migrants to save in their country of destination and the prevailing wage rate in their home country. It is shown that migrants coming from a low‐wage country optimally save more than migrants from a high‐wage country. Policy and research implications suggested by this savings behaviour are alluded to.     

Illegal Migration, Border Enforcement, and Growth

This paper analyzes the economic consequences of illegal migrants in the context of a model of trade and growth. In the model, capital and domestic labor are mobile sectors while illegal migrants are sector-specific. These assumptions give rise to a production possibility curve (with migrants) that lies partially inside the zero migration production possibility frontier. It is this feature of the model which generates ambiguous results regarding the relation betweendomestic welfare, illegal migrants, and enforcement. The steady-state growth path with migrants may lie above or below the balanced growth path without migrants.     

EU Enlargement, Migration and the New Constitution

The paper deals with the effects of migration resulting fromEU Eastern enlargement on the welfare states of Western Europe.Although migration is good in principle, as it yields gainsfrom trade and specialization for all countries involved, itdoes so only if it meets with flexible labour markets and ifit is not artificially induced by gifts of the welfare state.This is not the present state of affairs in Western Europe.In addition to measures that make labour markets more flexible,the introduction of delayed integration of working migrantsand the home country principle for nonworking migrants is arational reaction of the state. The proposed new EU constitution,which contains far-reaching rules for a European social union,should be amended accordingly. (JEL E2, F2, H0, J3, J6)     

Financial Support from the Family Network and Illegal Immigration

Barriers to immigration of low‐skilled workers from developing countries into the advanced countries prevent many potential migrants from leaving their countries of origin. With very low home‐country wages in relation to the cost of undocumented migration, the opportunity to migrate often hinges on the possibility of obtaining credit from a human smuggling organization or family and friends. This paper examines the conditions under which migration is optimal for an individual who lacks liquid assets, with a focus on alternative options for financing migration costs. One is by accumulating the required amount of savings out of source‐country income, with or without financial support from the family or social network. The other is debt‐bonded migration, which involves borrowing from a smuggling organization and paying off the loan while working in the host country. I find that greater financial support from the family network increases the attractiveness of debt‐bonded relative to self‐financed migration.     

Migration and pension

"Migration has important implications for the financial soundness of the pension system.... While it is common sense to expect that young migrants, even if low-skilled, can help society pay the benefits to the currently elderly, it may nevertheless be reasonable to argue that these migrants would adversely affect current young since, after all, the migrants are net beneficiaries of the welfare state. In contrast to the adverse effects of low skilled migration in a static model, [the authors] show that in a Samuelsonian overlapping generations model...migration is a Pareto-improving measure. All the existing income (low and high) and age (young and old) groups living at the time of the migrant's arrival would be better off."     

Work and welfare take-up of enlargement migrants in the United Kingdom

The Brexit decision was affected by the false perception that European Union (EU) enlargement migration, in particular from Romania and Bulgaria (EU2), has been a burden to the UK. The article analyses the debated but largely underresearched EU2 migration to the UK after accession to the EU in 2007 using data of the British Labour Force Survey. The novel findings are that EU2 migrants are found to exhibit quite different characteristics and behaviour than the other European migrants while doing better concerning work, self-employment and welfare take-up.     

GROWTH AND WELFARE EFFECTS OF WORLD MIGRATION

Using a two‐bloc endogenous growth model calibrated to two generic sending and receiving countries of equal size, we assess the growth and welfare impact of world migration flows of different skill compositions. The sending country (East) has a lower total factor productivity and a lower endowment of skilled labour. Migration can induce two growth‐enhancing effects: an efficiency effect from the more efficient use of labour in the receiving country (West) and a sectoral reallocation effect from a fall in the host country skilled–unskilled wage rates. Despite growth gains, there are both winners (migrants, the representative Western non‐migrant household) and losers (the representative Eastern household remaining). Remittances can see the latter group joining the winners.     

Wage indexation,migration, and unemployment

This article sets up a two-goods model with wage indexation and migrants. A dual labor market is introduced where the domestic workers receive an indexed wage while migrants receive a market-determined wage. The traded sector may be assumed to be unionized while the non-traded goods sector is non-unionized giving rise to flexible wages. This provides an example of segmentation and wage indexation. The wage indexation creates unemployment in the traded sector and the segmentation allows this unemployment to persist. The main results obtained are: sector-specific migration of labor may raise domestic welfare, while with capital accumulation such migration necessarily raises the relative price of the non-traded goods, leading to structural adjustment.     

Migration and urban poverty and inequality in China

Using data from recent surveys of migrants and local residents in ten cities in 2005, this paper examines how migration influences measurements of urban poverty and inequality in China, and also compares how other indicators of well-being differ for migrants and local residents. Contrary to previous studies that report that the income poverty rate of migrant households is 1.5 times that of local resident households, we find relatively small differences in the poverty rates of migrants and local residents. Although the hourly wages of migrants are much lower than those of local residents, migrant workers work longer hours and have lower dependency ratios and higher labor force participation rates. Including migrants increases somewhat measures of urban income inequality. Significant differences between migrants and local residents are found for non-income welfare indicators such as housing conditions and access to social insurance programs.     

Modeling migration barriers in a two-sector framework: A welfare analysis of the hukou reform in China

The present paper constructs a two-sector labor market model for China featuring endogenous internal labor mobility and heterogeneous costs of migration induced by the Chinese household registration system (hukou). The main novelty of our model is to divide migrants into those with more family responsibilities and those with fewer to explain the empirical fact that almost all young people with rural hukou have migrated to cities, while people who stay in the rural area are older and have more family responsibilities. We conduct two policy experiments using the model: one experiment concerned with reducing costs of living for younger migrants and the other for older migrants. The main results are that the first policy would unambiguously increase social welfare, while the reduced-cost policy for older migrants would reduce poverty and inequality although some urban natives may experience a wage reduction.