Samenvatting

Summary UA Migration and Trade (International economics and international economic organizations deel 2)

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Inclusief examenvragen januari 2020 Samenvatting van slides, notities (en enkele verplichte teksten) van het vak "international economics and international economic organizations" deel over Migration and Trade (gedoceerd door Prof. Maystadt)

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The economics of migration
Text 9: Beegle, K., J. De Weerdt and S. Dercon (2011), Migration and Economic Mobility in
Tanzania: Evidence from a Tracking Survey, The Review of Economics and Statistics 93(3): 1010-
1033.
Text 10: Mayda A. M. and G. Facchini (2008), From Individual Attitudes Towards Migrants to
Migration Policy Outcomes: Theory and evidence , Economic Policy 56: 651 – 713.
Text 11: Maystadt, J.-F. and Ph. Verwimp (2014), Winners and Losers among a refugee-hosting
population, Economic development and Cultural Change 62(4):769-809.
Text 12: Yang, D. (2008), International Migration, Remittances, and Household Investment:
Evidence from Philippine Migrants’ Exchange Rate Shocks, Economic Journal 118: 591-630.

1. Migration in perspective
Economists are convinced opening the labour market to foreign workers would greatly benefit
international finance and trade and globalization:
 Factor price equalization
 Fiscal gain: younger migrants, particularly needed in ageing societies
 Financial capital: remittances and FDI
 Incentives to acquire new skills, even for non-migrants (brain gain)
 Idea sharing, e.g. through diasporas
 Innovation through business and scientific networks

Size of migration:
 Recently rising; more skilled and more gender-based
 Rather stable since 1960 compared to population growth; lower than during the “Great Age
of Migration”
 Limited in magnitude, compared to hosting and receiving populations (migrants mostly are
moving within regions)

Why are people moving?
 Income gains, even if difficult to identify
 Experimental and IV methods show large welfare improvements (Beegle et al (2011),
McKenzie et al (2010), Gibson et al (2010))
 Huge potential gains for poverty reduction by reducing migration barriers/costs

What is the impact on relatives remaining behind?
 Remittances seem to improve investment in education and income-generating activities
(Yang (2007)) but no immediate impacts (Gibson et al (2011)) and also induce labour income-
generating loss
 Evidence that migration has positive effect on trade and innovation
 More evidence in favour of brain gain at macro level but still limited micro level evidence
 Brain drain in poor countries in the tropics, Sub Saharan Africa and Asia

What is the impact on receiving economies?
 Little evidence in developing countries (Strobl & Valfort)
 External validity regarding forced migrants? (Maystadt & Verwimp (2014))
 Little evidence showing migration as a cost for public finance and social order (criminality).
Crime is better understood through a Becker model

2

, 1. Instrumentalization of migration in Tanzania, Beegle et al
(2011)
 Very interesting paper (to be compared with McKenzie et al (2010) or Gibson et al (2011))
 Confirms gain improvements (36% in consumption growth)
 Confirms that unobservables at household level (selection between households)
correlate with growth potential matter, whereas individual heterogeneity does not
(selection within households)
 Instruments not perfectly orthogonal means exclusion restriction is debatable
 Even if discussed, cannot deal with sorting. People move to most attractive places
 Multiple instruments may ask for just-identified regressions or LIML estimations as
robustness checks (Angrist & Pischke (2009))
 New results to be expected

2. Randomization of migration in New Zealand, Gibson et al
(2011)
Very influential paper:
 Importance of “between households” selection
 Impact of decreased household labour availability is important
 In perspective: 25% decrease in income versus 263% increase of migrants!
 Limited income pooling

Limits:
 External validity (any study) but particularly for education and health of children
 Short term analysis: assets may have been used to finance migration, ATM card and income
 Based on re-called data and decreasing returns to migration?

3. Refugees, Maystadt & Verwimp (2014)
 Impact on labour markets: labour substitutability is key. Competitive natives may suffer
considerable adjustment costs (difficult to distinguish from skill-biased techno change for the
unskilled)
 But skill complementarity, surge in demand for goods, and potential boost for trade,
entrepreneurship and innovation explain migration seen as an economic opportunity
 Camps: mostly temporary, environmental degradation, disease and weapon spread

4. Beyond the labour market: fiscal net impact and crime
 Migrants contribute more in taxes and social contributions than they receive in individual
benefits
 Low-educated immigrants net contribution > low-educated native-born
High-educated immigrants net contribution < high-educated native-born
 Impact past 50 years in OECD countries on average rarely exceeds 0,5% of GDP
 Migrants may be located in less favourable places with high levels of crime
 Difficult because crime is also a function of economic opportunities (Becker model)

5. Political economy of migration policy
 Destination countries’ governments are not as restrictive as public opinion, due to pressure
of pro-migration interest groups
 Firms tend to be a strong force in favour of liberalization of migration flows

2

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