Chart of the Day: Why Migation Matters So Much

♠ Posted by Emmanuel in , at 4/11/2008 02:43:00 AM
Regular readers will have by now noticed the frequency of postings on migration matters. Why is this so? Aren't trade and finance more of the bread and butter of IPE, you may ask? While it is true that they have been the main topic areas of IPE, that emphasis is now changing somewhat to include migration. The chart above from page 33 of Lant Pritchett's book Let Their People Come says all you need to know about the economic benefits which are to be derived from trade and migration, respectively. In their general equilibrium model, Winters et al. (2003) estimate that if all trade barriers were removed, global GDP gains would amount to $104B annually. OTOH, if there is just a 3% increase in the workforces of industrialized countries from LDCs, there would be a $156B gain in global GDP.

What if labour markets were fully liberalized? Hamilton and Whalley (1984) estimate that global GDP would double. Given that opposition to migration is even more entrenched and pervasive than that to trade, you can be sure efforts to expand migration will be hard fought. Public opinion against migration is very strong. However, the sheer magnitude of even incremental gains has persuaded me that, yes, migration is now a more important matter for development than trade. Of course, dealing with goods rather than people has vastly more challenges on the human side. Still, the future of IPE research may very well be in migration, not trade given the far greater gains to be had in the former area. So, read up on multiculturalism and social capital if you're interested in migration. I may be 0% original, but migration is certainly going to be a hot topic for decades to come.