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Migration’s Inevitability and Labor Mobility – Michael Clemens
00:24:34
In a recent study, CGD senior fellow found that, contrary to popular belief, development in poor countries actually fosters more migration, not less. Migration is certainly a hot topic, and since these , I invited Michael to join me on the Wonkcast...
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- [00:17]
A
Welcome to the Global Prosperity Wonk cast. I'm Lawrence MacDonald. With me in the studio today is Michael Clemens. He's a senior fellow here at the center for Global Development. He's an economist, also an economic historian. His recent work has focused on migration and he has produced a terrific new paper, does Development Reduce Migration? Michael, welcome to the show.
- [00:37]
B
Thanks a lot.
- [00:38]
A
What's the answer?
- [00:39]
B
Does development reduce migration late in the development process? Yes. Once you get to be a certain level, it seems that more development at home is associated, as we would think, with a lower propensity to leave a country that's developing. Not before that. Not when you are starting out at a very poor level. It seems to be just the opposite.
- [01:01]
A
And what's the per capita GNP or the mean? The median maybe, given that we're interested in medians now, what's the mean or median per capita GNP where you would begin to see a decline in the propensity to migrate?
- [01:14]
B
It seems to happen sometime around 6 to $8,000 per capita GDP at purchasing power parity, that is measured at the prices of the United States. So we're talking about countries like vaguely in the range of Dominican Republic, Albania, Egypt, Algeria, El Salvador. These are countries that are middle income according to the World Bank's classification, I'm guessing.
- [01:39]
A
And you may not know, although you probably do, because you know a lot, that when I went to Taiwan soon after graduating around 1976, that it was probably just about at the tipping point.
- [01:48]
B
Exactly. We've watched some countries go through this transition in the late 20th century.
- [01:54]
A
And that may explain why when I first encountered this, I said to you, duh. Because when I was in Taiwan, there had been very extensive migration and we were just at the point where I was teaching English. I had a lot of students who were new graduates and they were trying to decide whether to migrate or not. And they were beginning to have friends, older brothers, older sisters who are coming back.
- [02:18]
B
Exactly.
- [02:19]
A
And I've been in quite a number of other poor countries where it seems like rising income makes it makes migration more interesting. When I lived in the Philippines, certainly people were migrating like crazy. And as incomes went up, they migrated more.
- [02:34]
B
Both more interesting to them and they have a greater ability to do it as a country develops. You can afford education, which helps you get abroad. You can afford the plane ticket. You're more likely to have connections with people in other countries, people doing the kind of jobs that can help you get abroad. It's a synergistic process.
- [02:54]
A
I imagine it might be as simple as having electricity and a radio and a television so that you can see.
- [02:58]
B
What the world looks like and a cell phone and Internet and the other things that come along with a certain level of development. And when you're in rural Niger and very, very poor, certainly in the abstract, you have a strong incentive, economic incentive to go abroad, but very little ability and social networks that you need to realize that ambition.
- [03:17]
A
So if I'm a very poor country, as incomes go up, the, the propensity to migrate is going to rise at a certain level when I start approaching a sort of lower middle income status that will gradually start to decline.
- [03:31]
B
Exactly.
- [03:32]
A
That seems to match my intuition. The simple policy prescription then is let's keep Haiti poor. Because if we improve incomes in Haiti, people are just going to want to migrate even more.
- [03:42]
B
If your goal is to stop migration.
- [03:44]
A
The steam is blowing out of Michael's ears right now.
- [03:48]
B
I really wish that people with your intuition, your international experience, your global vision, were in charge of a lot of aid agencies, because I talk to people who are involved with international aid all the time, official aid philanthropists, particularly Haiti, as you mentioned. And there is the idea out there that first of all that stopping people from leaving Haiti is a desirable goal separately from that, that it is a feasible goal to do with fostering development in Haiti. No matter what you think of whether it's a desirable goal to keep people in Haiti, the clear lesson of the history of economic development is that for countries around the low level of development of Haiti, countries like Cambodia, Papua New Guinea, Ghana, Guatemala, Honduras, countries whose incomes are way below this threshold that we're talking about, absolutely the biggest thing to expect with more development, there is more migration, Absolutely, not less.
- [04:51]
A
Okay, so my ridiculous prescription of let's keep Haiti and other countries poor is clearly unethical and impractical.
- [04:59]
B
We won't be quoting you on that.
- [05:01]
A
You know, that's the red herring. But what is the policy prescription then? If as incomes rise from very low levels to approach lower middle income status, then the propensity to migrate is going to increase. What's your advice to policymakers based on that?
- [05:16]
B
That is how I finished the paper. Really. I think that a big way that aid agencies and philanthropists have engaged with the whole connection of migration and development is with this vision of we will use development to slow down migration so that people don't need to leave. That might be a vision that can be realized over generations or a century for the poorest countries, but for, for the time being, that is not the way it's going to go the way for policymakers on the development side to engage with migration is to know that if they are successfully fostering development in the poorest countries, they are going to be encouraging migration, and they need to plan for that. And they need to make ways for migration to happen in ways that foster development part of their development planning. That's not going on in, in the case of Haiti, I can say very clearly I talk with people who are working on Haiti all the time. The World bank has, for example, an $800 million portfolio for Haiti, not $1 of that, and I really mean $0 of that, are associated in any way with fostering labor mobility. That's not part of the development plan. And the lesson of history is exactly the opposite. The people who are planning for Haiti's future need to be planning for labor mobility.
- [06:34]
A
So part of that planning for mobility, and here I'm thinking of some of your other work, has to do with encouraging circularity, making it easier for people to leave, but also easier for them to come back. Can you talk about that?
- [06:48]
B
Planning for labor mobility involves all kinds of things. It involves making sure that people's skills are portable between countries. It involves making sure that pensions are portable between countries. It involves making sure that remittances are easy to send and cheap and that people don't have to pay, for example, to send money to Africa as a remittance. The World bank calculates average 13% of the remittance price is spent just getting the remittance to Africa. With 80% of African adults having access to cell phones now and the technology to send money from any cell phone instantly to any other cell phone, there's absolutely no reason why Africans need to be paying 13% of remittances to send money to their families, something which has tremendous impacts on poverty, on schooling, on things that development agencies are interested in. But not a lot of development agencies are working on making remittances cheaper, creating infrastructure for migrants to help their own countries out. This is the kind of thing that you do when you are. When you have incorporated labor mobility into development planning. And just very, very few, precious few people who are interested in, in fostering development are doing it.
- [08:00]
A
I think the remittance story is pretty well known to people who are interested in migration and development. If I'm not mistaken, even at the level of the G20 they have targeted reducing remittance transactions as being one of the goals. Dilip Ratha, of course, the World bank, has worked on this. I'm familiar with his work. Having known him when I was there.
- [08:17]
B
Yes.
- [08:18]
A
The remittance piece is pretty well known. Some of the other things that you mentioned, portable pensions, portable training, certification, what would that entail?
- [08:28]
B
I can tell you about one thing that we are working on at CGD right now, which is trying to develop international mechanisms of finance for education. So a big concern that a lot of people have about the migration development nexus is that a lot of the people who start to leave poor countries when they are able to do it are highly skilled people. And one of many complications with that is that a lot of the higher education of people in the poorest countries is financed publicly by taxpayers. And when highly educated people leave, they take that subsidy with them. One response to that that you find, for example, in the recent book Exodus by Paul Collier, is that blocking the movement of those people, particularly skilled people, as a tool for fostering development. And he specifically says that this will work in Haiti.
- [09:20]
A
This is the right answer, I think goes by the term ethical recruitment. Is that right?
- [09:25]
B
I would not use that adjective. But yes, that is a term.
- [09:27]
A
That is people who are in favor of this say it's unethical for, say, the UK to go in and hire Ghanaian nurses since they were paid for from the public budget and recruiting them is unethical. Therefore, ethical recruitment is not to recruit in those poor countries.
- [09:41]
B
I mean, something that more steam shooting.
- [09:43]
A
Out of Michael's ears. Boop, boop, boop.
- [09:44]
B
There's something unfair which is going on, which is that taxpayers in one country are subsidizing education that's being used elsewhere. You could argue that there's something unfair about that, and I think that argument has some merit. What I would question is the Collier solution of stopping people from moving, which has a lot of ethical complexities when we're talking about trapping people in poor countries that the very people implementing such a policy might not be willing to live in and face the professional prospects there that they're causing other people to face. There is another answer to that unfair situation, which is providing mechanisms for the people who benefit from the training of those people to pay for them. It could come in all kinds of forms. It could be like a migration contingent student loan, so that people who get the training themselves end up paying from the much higher salaries that they get at the destination. It could involve destination country governments, it could involve destination country employers. There are examples of incipient initiatives like this happening all over the world, but none of them involve actually forcing people to not realize their dreams and ambitions by moving to other countries. That unfortunately Is what folks like Collier recommend.
- [10:59]
A
We're going to take a short break. When we come back, I want you to unpack this a little bit in terms of a country that I know reasonably well or used to know having lived there, the Philippines, which of course is well known around the world for exporting labor. This is the global Prosperity wonkast from the center for global development. My guest today is Michael Plemons. We're talking about migration and development in particular in the context of a new paper in which he has read some 200 other papers, crunched some new data and shown that the propensity to migrate rises as poor countries develop and only around $10,000 begins to decline. $10,000 GNI. I've rounded Michael to the nearest 10. We'll be back in a welcome back to the global prosperity wonkcast. With me in the studio today, Michael Clemmons. We're talking about his new paper, does development reduce migration? Michael, I said before the break I wanted you to explain the idea of alternative mechanisms to finance training that don't put you in this situation where the poor country has paid to train somebody who then leaves. And the response to that by some people is to say don't let people leave. You say another alternative, a more ethical alternative is to change the way that people's studies are financed. Talk to me about the Philippines. How does it happen there? We all know that there are hundreds of thousands of Filipinos working abroad. The ones I know best are nurses. But of course, when I lived in Hong Kong, armies of young women working as ammas doing childcare. How does that get financed? Are they taking education that was paid for by the government and then going abroad?
- [12:55]
B
Occasionally. But in the case of some of the most important migration flows like nursing, the huge majority of it is publicly is privately financed. People often take loans from their family or they come from an upper class family. They pay for the I should say relatively upper class family. They pay for the education themselves and then they go abroad and earn just multiple times what they could be earning at home. And through family networks they're able to self finance.
- [13:24]
A
There's an alternative model which is the country that might want to employ people pays for it. And there's a little of that going on. Is it in Australia and New Zealand?
- [13:33]
B
There are little initiatives like this all over the world. It happens through governments. You mentioned something called the Australia Pacific technical college which does sort of vocational level technical training at five sites around poor countries of the South Pacific, Some of which is intended to supply shortage labor in Australia. And really it ends up being Australian taxpayers who are paying for the training of these guys.
- [14:02]
A
So if Australia thinks it needs plumbers, they will pay to train plumbers in Papua New guinea and then let them come to Australia and work.
- [14:12]
B
Most of the program is for technical education in the island countries. So it is not mainly a migration program, but part of the raison d' etre of it from the beginning was to train for the region. And there has been a certain amount of migration among the graduates, although most people get the training and stay in the country of origin. For the people who do move, there is no fiscal brain drain problem because they are coming to Australia and Australians paid in the island country for their training in the first place. There are other examples of this. A lot of Filipinos who acquire skills in the Philippines and go abroad, work on ships, the crews, a substantial fraction of the crews of all of the cargo liners, oil tankers around the world are Filipinos who got training in various institutes around the world.
- [15:05]
A
It's very gender specific, isn't it? The nurses, virtually all women accrues virtually all men.
- [15:10]
B
Yes, very much. And very often it's the shipping company that pays for their education in huge training institutes that they have in the Philippines. So in a different way, here again, it is the destination in this case a multinational company rather than a country that is paying for the training. And here's a solution, other than denying the jobs to them and trapping them against their will in the Philippines, which I do not think is the ethical solution.
- [15:38]
A
So I think the broad picture is pretty clear. You've identified by looking at this huge new database in more than 100, I guess nearly 200 papers, that there's this inverted U that migration tends to rise up to 7, 8, 9,000 median income and then declines only after that.
- [15:58]
B
Exactly.
- [15:59]
A
And that given that this is going to happen, it makes sense to look at mechanisms to facilitate mobility, including creative ways to finance that training. So it doesn't take money from the public purse of poor countries.
- [16:10]
B
Exactly. Plan for it, accommodate it, get ready for it, rather than pretend like it's not going to happen.
- [16:17]
A
You talk about a mobility transition. How long does a transition like that take?
- [16:22]
B
It depends on where you start from. If you're going up the mountain, the time to the summit depends on where you start from. If you're starting from from the level of Niger, Burundi, something like five, six hundred dollars per capita per year, and at a robust growth rate like 2% every year, you want to get to this transition point of $79,000 a year. You're looking at over a century. So for the poorest countries, this is a transition that is going to likely take a very long time. I mean, in the next century we could all be cyborgs. I mean, planning over this kind of horizon is tentative at best. But I'm saying if the countries are to follow the trajectory that poor countries have followed until now, this is going to happen so far in the future that it's not relevant for current development planning.
- [17:15]
A
And of course, the countries that have actually made the transition to a middle income status, you said robust growth of 2%. I'm just thinking that is not really what it takes to develop. They grew it 3, 5, 7, 8, 9%. Korea, Taiwan, Hong Kong, Thailand, even Indonesia.
- [17:31]
B
The ones who did it recently. Yes.
- [17:32]
A
Yeah, the ones who've done recently.
- [17:33]
B
The US got to be rich by growing pretty much 2% every year since 1776.
- [17:37]
A
Oh, I didn't know that.
- [17:38]
B
I mean, with the fluctuations. But that's the long term average and it adds up over time. In 1776, we had roughly the equivalent of today's living standard of Indonesia. And we got to be this rich by approximately 2% per capita. Real growth again and again and again and again. Never a Chinese like explosion.
- [18:00]
A
Talk to me about why the propensity to migrate might level off and then decline after you reach a certain income level. We talked about the fact that, you know, people have more money to buy the airplane ticket, they know more about the world, they've got better connections. But you were telling me during the break there are some other mechanisms that I hadn't thought about that might cause this decline in the propensity to migrate. Once you reach, say 7 to 10,000.
- [18:25]
B
When economists and sociologists and anthropologists and geographers are all over an issue for 45 years, they come up with all kinds of theories. And there are lots of other explanations for this that are out there. And there still is a research agenda around establishing which of these mechanisms are important at different times. Some of the other very important forces that have been mentioned are demographic forces. Countries, as they develop, tend to go through a demographic transition in which child mortality rates fall before fertility rates fall, meaning that there's typically a youth bulge that occurs in the process of development.
- [18:59]
A
Lots of unemployed young adults seeking opportunities.
- [19:04]
B
And there tends to be more migration pressure from them. And that seems to be an important part of the transition as found by Tim Hatton and Jeff Williamson and many other scholars who have looked at transitions that have happened over the very Long term, in the past, they studied the issues since 1850. There's a whole other strand of literature on inequality. The role of inequality. If in the development process inequality is rising in my country, the group that I compare myself to in order to define for myself what is a satisfactory life might start to look different and it might start to look more like an international group. And if I don't have opportunities in my country to reach that kind of level of what I perceive to be something within my reach, I might be more likely to seek it elsewhere. And of course, there is the destination countryside. Everything that we've talked about relates to people's desire to leave. There are also restrictions on the ability to leave that tend to fall away as you get richer. There are reasons why it's harder for people from poor countries to get visas to the United States. Extremely few work visas available to Haiti to come work in the United States, for example. And part of that is because Haiti's really poor. So there's a visa supply constraint that tends to loosen as you develop the country.
- [20:29]
A
So if I'm Irish, not so much of a problem.
- [20:32]
B
We've always been very welcoming to Irish. Even during the 70 years that the United States specifically banned all immigration by all people of Chinese ethnicity, we were nevertheless welcoming of Irish.
- [20:45]
A
Michael I want to bring this back to the migration debate here in the United States. There's been a lot of talk about whether or not there would be broad migration reform. It looks very unlikely to happen, I think, during the second half of the Obama administration. Are there things that can be done at the margins that would make U.S. migration law more development friendly? And in particular that would draw on your research here to inform it tweaks around the edges that could make it more supportive of both development and also poor people's efforts to escape poverty.
- [21:22]
B
There's one clear connection I see to immigration reform in this research, and it's that a lot of the discussion about immigration reform obviously relates to to Mexico, the U. S. Mexico relationship. Mexico is above this threshold. Mexican real GDP per capita is well over $10,000 a year. And there are good reasons to think that as Mexico continues to develop, there will be less and less migration pressure from Mexico, both for demographic reasons and for economic reasons and others.
- [21:55]
A
In fact, we've seen a fall off recently.
- [21:59]
B
As we speak, the net immigration from Mexico, authorized and unauthorized together, is around zero. That might pick up as the US economy picks up again. But it's not unrealistic to think that in the next 5, 10, 15 years there could be steadily decreasing immigration pressure from Mexico. However, there are a lot of other much poorer neighbors that we have. Honduras, Nicaragua, Jamaica, Haiti. All of these countries remain well below this threshold. As they continue to develop, there is going to be rising, typically migration pressure from those countries. And the US Is definitely going to need their labor. The need for low skilled labor especially is not going away. Sometimes talking to people about migration, they seem to think that the only desirable migrants are PhDs who go to Silicon Valley. Somebody's got to take care of their children, somebody cleans their offices, somebody builds their offices, somebody picks the vegetables that go into their salads. And right now and for the foreseeable future, those people are going to be immigrants and they might start coming from other countries than Mexico. But we are going to need to prepare for that mobility as well. So the one way that this, that this research might relate to that discussion is that the pattern of countries sending US migrants might change. But even as Mexico goes through this transition, that doesn't mean that there's going to be necessarily fewer people coming or less pressure to come. It just might be somewhat different mix of countries.
- [23:38]
A
That's terrific. Thank you for broadening out the scope from the research to the implications for US Policy. This has been the Global Prosperity Wonkcast from the center for Global Development. My guest today is Michael Clemens. We've been discussing his new paper, does Development Reduce Migration? And more broadly, the implications of his research and the research of others for policy that affects both migration and development. You can find the Wonkast online on itunes and on stitcher. That's my favorite way to get it. Just search for wonkcast or CGD and sign up to hear a new interview every week. Until next time, I'm Lawrence MacDonald. Thanks for listening. It.