Migration Policies. What are we talking about? Migration as great absentee in the era of...
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![Page 1: Migration Policies. What are we talking about? Migration as great absentee in the era of globalisation. Migration policies restrict the movement of persons.](https://reader036.fdocuments.net/reader036/viewer/2022062409/56649e545503460f94b4a53b/html5/thumbnails/1.jpg)
Migration Policies
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What are we talking about?
Migration as great absentee in the era of globalisation. Migration policies restrict the movement of persons across jurisdictions by establishing:
- quotas in terms of maximum number of work permits
- rules concerning the allocation of quotas, admission procedures and lenght of permits
- years/procedures to obtain citizenship- rules for asylum policies
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Outline
• Measures and cross country comparisons• Theory
– A Competitive Labor Market– An Economy with Wage Rigidities– Wage Rigidities and Unemployment Benefits – What Drives Migration Decisions?– Effects on Income Distribution of Skill-biased
Migration
Source: Tito Boeri and Jan van Ours (2008), The Economics of Imperfect Labor Markets, Princeton University Press.
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Outline (cont.)
• Empirical Evidence – Wage and Employment Effects – Determinants of Migration– Fiscal Effects
• Policy issues: – Closing the Welfare Door?– Adopting a Points System?
• Why do Migration Policies Exist?
Source: Tito Boeri and Jan van Ours (2008), The Economics of Imperfect Labor Markets, Princeton University Press.
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Measuring the Strictness of Migration Policies
• Quantitative indicator developed by www.frdb.org transforming qualitative information on scalar measure of strictness (higher scores denote more strict regulations). Draws on information on
• Existence of Quota system• Number of certificates and procedures required to be
admitted as a foreigner• Number of years required to obtain Permanent Residence• Number of certificates required to legally reside in the
territory • Number of Years required to obtain first Residence Permit
Measures and cross country comparisons
Source: Tito Boeri and Jan van Ours (2008), The Economics of Imperfect Labor Markets, Princeton University Press.
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Trends in migration policiesImmigration policy indexes
60
80
100
120
140
160
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Adm iss ion requirem ents Length of firs t s tayStaying requirem ents Years to obtain a perm anent res idence perm it
Num ber of adm inis trations involved QuotasAsylum policy
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Evolution in individual countries
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Deteriorating perceptions% of respondents agreeing with the following statements Germany Spain France UK Italy (1)
"immigration bad for country's
economy"
ESS 2002 29 23 28 43 25
ESS 2006 38 24 39 45 41
2006-2002 9 1 11 2 16 "immigrants make country worse place to
live"
ESS 2002 33 34 37 41 39
ESS 2006 41 35 42 46 54
2006-2002 7 1 5 5 14"unemployed immigrants
should be made to leave"
ESS 2002 50 25 32 53 49
Harris 2009 67 71 51 78 79
2009-2002 17 46 19 25 30
Notes: 1) The ESS survey took place in Italy only in 2002 and 2004.
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Not always so Strict
• Up to the 1950s migration encouraged in Europe
• Restrictive stance since the beginning of the 1970s together with rise of unemployment
• More migration to the US at the beginning of the XXth Century (www.ellisislandrecords.org )
Source: Tito Boeri and Jan van Ours (2008), The Economics of Imperfect Labor Markets, Princeton University Press.
Measures and cross country comparisons
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A Competitive Labor Market
• Wages adjust fully to changes in labor supply. Focus on the short-run: no changes in the capital stock. Labor demand unaffected by immigration. Migration like labor supply shock
• Assuming that migrants and natives are perfect substitutes (homogenous labor), the impact of immigration on employment depends on the elasticity of labor supply
• If labor supply is rigid, no effect on employment among natives
• If labor supply is elastic, employment among natives decline, but no unemployment
Source: Tito Boeri and Jan van Ours (2008), The Economics of Imperfect Labor Markets, Princeton University Press.
Theory
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Immigration to competitive labour markets
• With rigid LS • With elastic LS
L1L0 L L
w w
w0
w1
LdLd
Ls Ls
w0
w1
L0 L1
A1 A2 BA B
B=immigration surplus
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An Economy with Wage Rigidities
w
L
w
N
Unemp
• With a minimum wage • With semi-rigid wages
w
L
w0w1
N
Unemp
Ls Ls
Ld Ld
Theory
N+M N+M
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In imperfect labour markets, migration involves unemployment
In imperfect labour markets, migration affect income of natives in a variety of ways:
• changes in wages
• changes in employment, and
• changes in unemployment
• taxes
• other externalities related to U? (crime?)
Theory
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Wage Rigidities and Unemployment Benefits
• There is also a fiscal effect of migration, insofar as immigration affects unemployment in the destination countries
• This fiscal externality is larger if labor is not homeogenous and unemployment benefits attract more low-skilled migrants, more likely to become unemployed or crowd-out low-skilled natives
Theory
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What Drives Migration Decisions?
• Decision based on estimated discounted net present value (NPV) of migration
• where– wF = wage in the destination country
– wH= wage in the origin country
• Analogies with theories of human capital
Theory
C0NPVt = 1
-= å (wF(t) - wH(t)) Te
δt
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• Migration occurs if :
where– (wF - wH)= wage differential between the
foreign and the own country–C0= frontloaded migration costs– δ = discount factor
H
O
H
HF
w
C
w
ww )1()(
What Drives Migration Decisions?
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Migration and a Minimum Guaranteed Income
Theory
w
country 1
skill level
skilled migrants go to country 1 unskilled migrants go to country 2
safety net in country 1: also the unskilled go to country 1
s*s**
country 2
country 1
country 2
s*
w
skill level
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Migration and skills
• Skill composition of migrants depends on differences in rates of return of skilled and unskilled workers in the origin and destination region/country
• Highly educated end up in the country/region that values them the most
• Unemployment benefits creating income floor reduce skill content of migration
Theory
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Effects on Income Distribution
• Assuming that skilled and unskilled labor are complements
• Immigration affects income distribution only insofar as migration affects the skill composition of the population
• If more low-skilled income inequality increases
• If more high-skilled, income inequality declines
Theory
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Effects on Employment and Wages
• Negligible effects of migration on wages and employment among natives
• This finding can be reconciled with economic theory when account is taken of– self-selection of migrants in high-wage regions
(“greasing the wheels” effect)– changes in migration patterns of native
workers– changes in the regional output mix
Empirical evidence
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“Greasing the Wheels” Effect
Empirical evidence
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Local U matters
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Convergence in Regional Wage Rates
Convergencecoefficient
log(No. of immigrants/No. of natives)
-5 -4 -3 -2 -1-.06
-.04
-.02
0
.02
.04
Source: Borjas (2001a). Each observation represents a convergence coefficient estimated in a particular decade for a particular skill group. The measure of immigrant penetration gives the log of the number of immigrants in a particular skill group who arrived during a particular decade relative to the number of natives in that skill group at the beginning of the decade. The points on the scatter diagram are weighted by the inverse of the squared of the standard error of the convergence coefficient.
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Determinants of Migration (Hunt)
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Location choices of migrants(Costa and Kahn)
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Fiscal effects
Contributory Non Con-tributory
All transfers Education re-lated al-
lowances
Health limita-tion in activi-
ties
Taxes0
0.2
0.4
0.6
0.8
1
1.2
1.4
Migrant to natives odds ratios of the receipt of various types of transfers and taxes in the EU15
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Net Fiscal Position of migrants
Country
share of net contributors (SNC)
among migrantsSNC: migrants over
natives
Average net position (ANP)
(euros)
Natives-Migrants
ANP overall
Austria 78,3% 1,34 9481** 0,40
Belgium 84,0% 0,91 11788*** 0,51Denmark 52,2% 0,84 -1063 -0,11
Finland 47,2% 0,80 -2863 -0,32
France 44,5% 0,81 -2285 -0,27
Germany+ 64,4% 1,21 3137 0,42
Ireland 50,3% 1,06 -1937 -0,49
Luxembourg 54,9% 0,99 -1887 0,88
Norway 55,7% 0,86 -1328 1,14
Spain 91,7% 1,54 8047*** 1,14
Sweden 49,0% 0,77 839 0,96United Kingdom 68,9% 1,23 12533** 0,73
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Residual dependency/social free-riding Coefficient s of migrant dummies in probit regression of benefit receipt
Non ContributoryExtra EU 25
Austria -0.07*** Belgium 0.14***
Denmark 0.04Finland 0.16*** France 0.29***
Germany+ 0.15*** Greece -0.05*** Ireland -0.03 Italy -0.01 Luxembourg 0.10** Netherlands 0.42*** Portugal -0.18*** Spain -0.02***
Sweden 0.01
United Kingdom -0.22***
ContributoryExtra EU 25
Austria -0.01
Belgium -0.20***
Denmark 0.06***
Finland 0.07***
France -0.10***
Germany+ 0.03**
Greece -0.08***
Ireland -0.19***
Italy 0.00
Luxembourg -0.10***
Netherlands -0.13*
Portugal -0.12***
Spain -0.09***
Sweden -0.24***
United Kingdom -0.15***
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Closing the Welfare Door?
Policy issues
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Skill composition of migrants is deterioratingRatio of the share of individuals with tertiary education in the migrant
population and the same share in the native population
CountryRelative Share
‘90Relative Share
‘00Δ
2000-1990
Spain 2,19 1,15 -1,05
Portugal 1,85 1,03 -0,82
Greece 1,79 0,99 -0,80
Italy 1,60 0,91 -0,69
Germany 1,98 1,36 -0,61
Norway 1,48 1,05 -0,43
Ireland 2,83 2,50 -0,33
Netherlands 1,08 0,87 -0,21
France 1,32 1,12 -0,20
Belgium 1,05 0,87 -0,18
Austria 0,77 0,71 -0,06
Finland 1,03 1,01 -0,02
Denmark 0,78 0,81 0,03
Uk 1,67 1,83 0,16
Sweden 1,11 1,29 0,18
Sources: Own extrapolations on data from Docquier (2006) and Barro-Lee (2000)
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Pros and cons of closing the welfare door
– Popular policy. It would address concerns of public opinion.
– It would affect the size of migration flows (increase by 1 stdev of generosity implies 3% higher migration) more than their skill composition
– Difficult to enforce: experience of California– Problems in the assimilation of migrants– Equity considerations
Policy issues
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Adopting a point system?
• Skilled migration is better for rigid countries
• Simplification of policies (including asylum)
• Is it effective in selecting migrants?• Risk of “brain drain”? • Equity considerations.
Policy issues
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Skill distribution of migrants ad natives (IALS scores)
Germany New Zealand
Policy issues
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Evidence on brain drain effects on LDC growth
Source: Docquier – Rappoport (2004)
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Migration policies are already getting selective
• Everywhere tightening of migration policies towards the unskilled
• While race to attract highly skilled migrants • Explicit point systems in an increasing
number of countries (Canada since 67, Australia since 84, New Zealand since 91, Switzerland since 96)
Policy issues
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Why do Migration Policies Exist?
• Migration policies are essentially redistributive policies supported by workers at the low end of the skill distribution.
• Immobile taxpayers can also benefit from tight migration policies because they are vulnerable to fiscal spillovers associated with inflows of migrants who draw benefits from social welfare systems. Aging increases the political power of these groups, while an increase in the educational attainments of the domesticworkforce may weaken the anti-immigration constituency.
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Why do Migration Policies Exist? (cont.)
• Migration policies can, at best, induce some gradualism in migration flows that would otherwise occur in large waves.
• Pressures on welfare systems that exert negative fiscal spillovers on the domestic population can be reduced by either restricting access to welfare by migrants or by adopting explicitly selective migration policies
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Review questions
• Why do employers generally support migration, while unions do not?
• What are the effects of migration on income distribution at home?
• What is the relation between internal and international migration?
• Why does empirical work often not find the strong effects of migration on native wages that are predicted by economic theory?
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Review questions (cont.)
• What does the Roy model predict about the skill composition of migration?
• How do the elasticities of labor demand and labor supply affect the economic impact of migration?
• What is the greasing-the-wheels effect?• What are the pros and cons of a points system?• What are the pros and cons of a policy that closes
the welfare door to migrants?