Stumbling and Mumbling

Migration as poverty reduction

chris dillow
Publish date: Tue, 17 Nov 2015, 02:14 PM
chris dillow
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An extremist, not a fanatic

Immigration is a great way of reducing poverty. A new paper (pdf) by John Gibson at the University of Waikato and colleagues has established this in a neat way.

Each year, Tongans wanting to migrate to New Zealand are randomly given permits to do so. Comparing permit-winners who migrated to those who didn't win the ballot allows us to see the impact upon incomes of migration: because the ballot-winners, being drawn at random, are otherwise similar to the losers we get a relatively clean measure of the effect of migration.

Gibson and colleagues estimate that a ballot winner who migrates earns an average of NZ$340 per week, compared to NZ$126 for losers who stay in Tonga. That's almost a tripling of income. It amounts to a lifetime gain of well over £100,000. Controlling for the difference in cost of living between Tonga and New Zealand doesn't much affect the results.

This is consistent with a finding by Orley Ashenfelter - that people doing the same job (working in McDonalds) earn ten times as much (pdf) in real terms in rich countries as in poor ones.

You might think this is trivial: people in rich countries are richer than those in poor ones - big deal. I'm not sure it is. The fact that incomes differ so much for similar people - ballot winners and losers or McDonalds workers - shows that such differences are due far more to the luck of where we were born than to personal qualities. We westerners often forget this: we were born on third base but congratulate ourselves on hitting a triple.

All this poses the obvious question: what right do we in the west have to deny others the chances that we got through the sheer good luck of being born in the right place? Does the one-in-a-millionish chance that a migrant might be a terrorist justify inflicting poverty upon tens of thousands of decent but unlucky people? Even if we concede that there are other costs to host countries - such as a loss of social cohesion and less internal redistribution - do these justify inflicting mass poverty? If so, how? As Bryan Caplan says, your love of your countrymen may tempt you to treat foreigners unjustly, but it's no excuse for treating them unjustly.

Of course, it's not just the impact of immigration upon rich countries that matters. So too does the impact on poor ones. Paul Collier has suggested that migration hurts these by depriving them of talented energetic people. But is this really an argument for migration controls? Forcing people to work within a particular country for substantially lower wages than they could get elsewhere is a form of slavery - more so than the high taxes of which right-wingers often complain.

I know the terrible Paris attacks might well cause a backlash against immigration. But this makes it all the more necessary to point out that there is a strong moral case for migration as a means of lifting people out of poverty. The question is whether morality trumps practicality, and if so why.

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