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A. Determinants of Immigration | matthewsimmigration

A. Determinants of Immigration

Discovering the determinants of United States immigration through an examination of migrant incentives is as important to the analysis as is the discovery of its private and public economic consequences.  Ensuring that immigration policy aligns with migrant incentives is imperative in the formulation of reform insomuch as designing inducements to legality and deterrents to illegality requires an understanding of what will work in light of what foreign nationals want from their collective migrations.  In this vein, the author finds it commonsensical and well-established that the initiation of migration across time and international space is fundamentally rooted in the strategies of individuals in search of improved economic conditions and opportunities as neither people nor incomes are distributed equally around the globe.  The World Bank divides the countries on which it collects data into 22 high-income and approximately 110 middle- and low-income countries.  In 2000, high-income countries included only 15 percent of the world’s population yet accounted for over 80 percent of the world’s $20 trillion GDP.  In 1993, the average per capita income in these affluent countries was over $23,000.00 annually, versus an average $1,100.00 in the middle- and low-income countries.  The gap between average incomes in the richest and poorest countries was 11:1 in 1870, 38:1 in 1960 and 52:1 in 1985.  These data suggest that an average worker from one of the poorer 110 countries could increase his or her income 10 to 50 times merely by "emigrating for employment" to one of the 22 richest countries. 40

 

These economic disparities between rich and poor countries are simply too significant to ignore as they play upon the individual worker’s instinctual human rationality towards utility maximization, or obtaining the highest possible economic well-being by "selling" the limited skills that he or she has available in the labor market.  This human rationality, a key assumption of neoclassical economic theory, is verified through such empirical studies as the International Labour Organization’s (hereinafter, "ILO") 1999 migration analysis, in which it estimated that "migrants for employment" accounted for 90 million people living legally or illegally abroad, comprising over 65 percent of all people living outside their country of origin or birth. 41  In 2000, high-income countries had per-capita GDPs that were 66 times those in low-income countries and 14 times those in middle-income countries, with only 903 million or approximately 15 percent of the world’s residents enjoying per-capita GDPs of $9,366.00 or more in 2000.  As economic theory would predict, these high-income countries contain over half of the world’s migrants within their borders.  Migration into the high-income countries, primarily a South-North flow, involves Mexicans moving into the United States as well as Chinese moving into Canada and Japan, Poles and Turks moving into Germany, and students and young people from many low-income countries studying or working in high-income countries.  In sum, "economic differences between countries are widening, encouraging migration for higher incomes and jobs." 42

 

Additional studies have shown that these economic assertions have been borne out by the history of migration, both in the great integrations of the world economy before 1914 and again in experience since the mid-1970s.  The main findings of these studies show that freer migration makes wage rates in migrant-related occupations more equal between countries and that total world output is raised by allowing more migration between states. 43  Moreover, recent globalization processes have rapidly universalized expectations and disseminated lifestyles and consumption patterns specific to the developed countries.  While these phenomena are being offset by a revitalizing of cultural and ethnic identities in developing states, large sectors of these populations increasingly expect to live in the same manner as in the developed world.  Indeed, the "American" way of life has long permeated Mexican societies, and discrepancies between expectations generated and actual opportunities for economic and social mobility in Mexico produce a propensity to migrate that has become a realistic alternative for much of the Mexican population. 44

 

The language of neoclassical economics provides for this human rationality towards utility maximization and is apt for articulating, in theoretical terms, what is perhaps a more rudimentary or commonsensical behavioral concept.  Rational choice fuels international migration as individuals leave behind absolute or relative deprivation in their countries of origin and embrace the hope of absolute or relative affluence in the countries for which they depart.  Until such time as the economic disparities between these sending-origin and receiving-destination countries are eliminated or at least severely reduced, international migratory flows will persist.  Therefore, in coming to terms with international migration, this dominant model of economic migration theory - known as the "push-pull" model - most readily guides understanding into the phenomena of voluntary emigration and immigration in their historical and contemporary contexts.  The model’s most important contribution to this piece is that it reveals the primary determinant of migratory behavior, a powerful tool in the building of an equitable moderate immigration policy.

 

Push-pull provides us with the expectation that both low- and high-skilled workers will choose to migrate from low-wage countries to high-wage countries in pursuit of utility maximization.  Higher wages imply that the marginal product of labor is higher in high-wage countries than in low-wage countries.  In other words, higher wages for the same workers mean that the workers produce more value in the receiving state than in the sending state.  This labor migration leads to net gains in wealth for the world as a whole, because labor is pushed and pulled to the country where it earns the highest return, thereby making the greatest net contribution to world production.  Market forces direct labor to the market where its marginal product is highest, and the larger the inequality in wages between countries, the larger the economic gains from liberalizing labor migration.  Under these premises, economic theory raises a presumption in favor of the free movement of labor 45 between low- and high-wage states.  Applying this conclusion to an examination of the impact of migrants on the labor market of the United States reveals that American natives, taken together, will gain from an immigration expansion.

 

However, a liberalized immigration policy allowing for reduced barriers to these labor flows may have the effect of driving down wages for American workers who compete with foreign national labor in certain industries.  As more and more low-skilled (and, to a far lesser extent, high-skilled) workers enter the country - either temporarily or permanently - competing natives witness their absolute wages decline in response to the increased supply of their particular skill sets.  However, this loss in wages is a pure transfer among natives offset by equal gains for employers who witness a rise in profits as the costs of labor decrease, and for consumers who obtain goods and services at lower prices resulting from the diminished costs of production. 46  Therefore, in the United States, the supporters of freer flows of migrant labor tend to be employers and consumers while the opponents tend to be low-skilled workers who compete with the cheaper labor imported from abroad.  Accordingly, the issue becomes one of economic efficiency v. labor protectionism and distributive justice, and the economic aspects of the reform debate can be conceptually reduced to a battle between the winners and the losers of liberalized immigration policy.

 

Thus, restrictionist approaches to immigration-related labor issues tend to adopt a neo-Malthusian view that every society has limited resources and a limited number of jobs. 47  Historically led by worker unions, 48 native minorities and other groups of low-skilled workers, restrictionists point to the mass influx of foreign national laborers for such domestic phenomena as unemployment, underemployment, marginalization of minority labor, and denial of labor rights.  Moreover, they point to overpopulation and overcrowding as strains on the country’s urban infrastructure and environment, and to saturated urban labor markets as the factor driving down wages for low-skilled natives.  Paradoxically, restrictionists assert that low-skilled immigration is comprised of the most destitute and least educated of sending state societies, and therefore poses a fiscal threat to the United States.  They suggest that the relatively sophisticated welfare programs in the United States are attractive incentives for low-skilled migrants, who are thought to place an unfair burden on the public treasury.  Finally, in further defense of their own economic self-interests, restrictionists emphasize the effects that high-skilled migration may have on foreign state economies as brains drain to the United States and form hemorrhages of scarce human capital and tax payments needed in these states for appropriate internal development. 49

 

In contrast, supporters of expanded immigration tend to adopt a Smithian or neoclassical view, which holds that market-oriented societies like the United States are incredibly dynamic and capable of absorbing large numbers of migrants.  Expansionists promote the positive domestic effects and international competitiveness that immigration creates for the American economy through an influx of scarce qualifications and abilities in the low- and high-skilled sectors of the economy, as well as entrepreneurial talent.  These migrants, who, because they tend to self-select (that is, they tend to be more able, ambitious, aggressive, entrepreneurial or otherwise more favorably selected than similar individuals who choose to remain in their places of origin 50), are thought to take relatively little from public coffers while contributing greatly to the human capital stock of the country and therefore to its overall wealth. 51  Moreover, expansionists seek to dispel the fundamental cause-and-effect connections adopted by restrictionists and point instead to business cycles and other market forces in the United States as well as inadequate development policies in sending states to account for any negative effects of international migration.  Finally, they assert that immigration poses no threat to either sending states or the United States and that U.S.-bound emigration is in fact a great benefit to sending societies, providing remittances and augmented cognitive, social and political capital that can be repatriated and used for community and national development.

 

Given these respective platforms, each of which are informed to various degrees by historical interpretation, contemporary empirics, and, in the case of expansionists, by the cosmopolitan liberalism often inherent to residents of liberal democratic societies.  It is therefore necessary as a next step to filter through the former and latter influences by examining the modern empirical evidence of immigration’s effects on the private and public sectors of the U.S. economy.  Understanding the actual and potential consequences of current levels of immigration will prove useful in determining a best-choice economic national interest formula.

40 Philip L. Martin and J. Edward Taylor, "Managing Migration: The Role of Economic Policies," in Global Migrants, Global Refugees, eds. Aristide R. Zolberg and Peter M. Benda (New York: Berghahn Books, 2001), 98.

 

41 International Labour Organization, Towards a fair deal for migrant workers in the global economy (Geneva: International Labour Office, 2004), 55-58.

 

42 Philip L. Martin, Sustainable Migration Policies in a Globalizing World (Geneva: International Institute for Labour Studies: 2003), 5.

 

43 Pugel, International Economics, 363-364.

 

44 Adela Pelligrino, "Trends in International Migration in Latin America and the Caribbean," International Social Science Journal 52, no. 165 (2000), 395.

 

45 Howard F. Chang, "The Economic Analysis of Immigration," in Migration Theory, 207.

 

46 Ibid., 208.

 

47 Hollifield, "The Politics of International Migration," 165 (citing Bouvier 1992, Coleman 1992, Borjas 1990, Martin 1994a, Teitelbaum and Weiner 1995, and Weiner 1995).

 

48 Labor unions (most notably the AFL-CIO and the United Farm Workers) have in large part changed their position on Mexican immigration, now viewing it as a strong supplement to membership in a time when native workers are joining in decreasing numbers.

 

49 Hollifield, "The Politics of International Migration," 139 (citing Bhagwati 1976, Bouvier 1992 and Borjas 1990).

 

50 Barry R. Chiswick, "Are Immigrants Favorably Self-Selected?," in Migration Theory, 61.

 

51 Hollifield, "The Politics of International Migration," 139 (citing Chiswick 1982, Simon 1990).

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