midterm Flashcards
(52 cards)
economic characteristics of immigration:
movement of factors of production from one country to another which affects the returns to all factors of production (capital and labor)
Immigrants are also consumers and this affects the demand for goods and services
Immigrants also carry new ideas and knowledge, key to economic growth
On other hand immigrants may use public services and impose costs to the host society
Push factors
Famine and poverty Low wages and unemployment Overpopulation High taxes Discrimination, religious persecution , violence and civil wars Social immobility
Pull factors
Higher wages and employment opportunities Property rights, Law and order Personal, religious and economic freedom Peace Social mobility and educational opportunities Gender equality Lower taxes Family reunion
Stay factors
Family and friendship ties Social status Employment Familiarity with culture and certainty Political and professional privileges Property
Stay away factors
Language and cultural barriers Discrimination Low social status Unemployment and low wages Lack of political rights Uncertainty and unfamiliarity War and crime
Formal exit barriers
Exit visa Exit or departure tax Prohibition Imprisonment Penalties on Family
Formal entry barriers
Entry Visa Quotas Prohibition Imprisonment Fines
Factors discouraging immigration
Immigration is costly bc of the cost of moving and the opportunity cost of maybe a position in a new country you are overqualified for
Dangers of the actual travel
Determinants of migration
Immigration policy id the most important determinant
Disparity in income is the second most important determinant (econ theory predicts that migration will level salaries)
Families toes, established communities
Econ forces which influence migration
Economic growth since the early 1900s has varied greatly from country to country resulting in huge discrepancies (between-country inequality)
lowered transportation costs.
Improved communications
The 20th century surge in population growth in developing countries.
Between country inequality vs. In country inequality
The major increase in inequality has occurred between countries
Most of the increase took place before WWII
Most of the current world inequality occurs between countries
History of migration
See slides
Labor migration
1955-1973): Germany, Austria, the Netherlands, Belgium, Sweden and other Northern European countries recruited unskilled workers from Southern European countries (Spain, Portugal, Greece…). Net immigration from the Mediterranean countries in the period 1955-1973 amounted to 5 million migrants (Zimmerman, 1995).
North vs South
Most migration is South-South and South-North. Then North-North . South is poor , north is rich
5 immigrant categories
Permanent settlers: people who enter a country with the intention to remain there permanently
Contract workers or professionals: people that move to another country to perform a specific type of work (agriculture, tourism, construction) on a temporary basis or to perform a technical or management job.
Asylum seekers and refugees: people who left their countries to escape political, religious, or social persecution as well as threats to their safety
Unauthorized/Undocumented immigrants: people who cross borders in violation of the laws of the destination country. It is very difficult to estimate the number of unauthorized immigrants.
Involuntary immigrants: some people are still forced to migrate (human trafficking: child labor and prostitution).
Of course some immigrants fall into more than one category.
Modern theory of migration looks at the migrant as either
supplier of factor services, a maximizing investor in his or her human capital
Or as a consumer of amenities and/or public goods.
Migrant as an investor in human capital
Human capital is education and health
This model implies that the immigrant chooses the location which offers the highest net income.
Since labor income is a return to human capital, migration is viewed as an investment in one’s human capital
This view draws back to Becker and Sjaastad (1962)
Sjaastad argues that a prospective immigrant calculates the value of the opportunity available at each alternative destination, subtracts the costs of moving and chooses the destination that maximizes the present value of lifetime earnings.
Mincerian rates of return to education calculation
=(wages w degree-wages foregone while getting degree) /wages foregone while getting degree Divide by how many years tom find the rater year.
Migrant as investor in human capital, the costs
Sjaastad uses distance as a proxy for migration costs.
Other monetary expenses include losses from selling material goods (house…), loss of seniority…
The model does not include non-monetary gains.
Migrants as investors in human capital, Sjaastad model shortcomings
It’s a single period model, cannot explain multiple migrations in a lifetime.
The unit of analysis is the individual as opposed to the household.
It assumes that migrants are perfectly informed about job opportunities
Finally remittances and changes in the exchange rate are not considered
Migration as life cycle decision
A young person may have a strong preference for locations with other young people, restaurants and high income.
On the other hand, a person nearing retirement may have stronger preference for locations with good climate and a good healthcare system.
As a consequence it is very likely that there will be multiple migrations during a person’s life.
Migrant as a consumer, affect on wages and rent
- person’s utility function includes goods and services that are not available everywhere.
- Desirable goods that are not available universally are called amenities and include such things as scenery, weather, clean air…
- The demand for amenities may change as a person moves from on phase of his life cycle to another, as culture changes or as economic growth changes incomes.
- Amenity rich areas will experience immigration, driving down wages and driving up housing prices.
- In amenity poor areas wages will rise and rents will fall.
- There will be a new set of interregional wage, rent and price differentials that reflect the compensation for the amenities.
Tiebout hypothesis
theory also extends to public goods including parks, hospitals, schools, roads, courts, police protection…the idea that people vote with their feet
The first part is that households decide where to live based in part on communities’ service-tax packages.
The second part is that community selection results in efficient levels of local public services, in the sense that each household ends up with the service-tax package it prefers.
Role of past migration
The community of family and friends is referred to as a kinship network.
The community of earlier migrants from a similar ethnic or regional background is referred to as migrant network.
Migrant and kinship networks can lower job search costs, the costs of securing house and child care, and stresses associated with migration.
