From Nationals to Naturals: Its a Natural Way to Think

1
From Nationals to Naturals Its a Natural Way
to Think

• Lant Pritchett
• International Migration Challenges and
  Opportunities in the New Age of Mobility
• Public Affairs Conference 2008
• April 11, 2008

2
Five Points

• The usual structuring of the migration discussion
  into impacts on sending and receiving
  countries is structured to ignore the gains to
  the movers
• Focus instead on income per naturalthe income of
  people born in a given place
• The wage gaps across workers are larger than ever
  in historyand are largely pure discrimination
• Given the existing wage gaps there is nothing on
  the agenda to address gaps in income per natural
  remotely like allowing labor mobility
• The myth at the heart of the existing
  international system will eventually have to be
  re-thought

3
The iron grip of place based thinking

• Imagine a worker with above average income in a
  poor country moves to a rich country and makes
  twice as much but that is a below average
  wageand there are no effects on anyone else (and
  the mover is much happier)
• Average wages in the sending country fall
• Average wages in the receiving country also fall.
• So migration is a bad thing? Because analysis of
  sending and receiving countries reveals not
  benefits?

4
Income per natural

• Think of the income per natural, per person of
  people born in Jamaica, that is, Jamaicans, no
  matter where they happen to reside
• Income per natural is a measure of development of
  Jamaicans.
• One is a place based measure and one is a people
  based measure

5
Guyana poorer than Paraguay but Guyanese are
richer than Brazil
6
Wages gaps across countries are larger than ever
before in history
7
Wage gaps are largely discrimination paying
different wages to workers of equal productivity
on either side of the border
Annualized wages of equivalent workerssame
nationality, education, age, sex, urban
residence, sector on either side of the border
8
Discrimination induced by the US border exceeds
any other form of wage discriminationand rivals
the wage impact of slavery
Slavery in Virginia, 1840-1860, ratio rental to
subsistence 3.8
9
Relaxing the discrimination against foreign
naturals participation in labor markets produces
larger gains than anything else available

• For micro-based interventions compare the per
  person gain to the number of days/weeks of gains
  from labor mobility
• Compare aggregate gains of reforms on the world
  agenda

10
The total present value of access to a lifetime
of micro-credit is the wage difference of 8 weeks
work of the same worker in USA versus in
Bangladesh
Source Gains estimated from Pitt and Khandker
for micro-credit (annual gain of 14 percent of
per capita HH consumption, CMP (forthcoming) for
wages
11
Logic of the Pax Americana

• Proliferation of sovereignswith decolonization
  and end of empires many more states with borders
• Free trade in goods promoted
• Free trade in capital promoted
• No expectation of labor mobility
• Implicit Myth Every sovereign state is capable
  of an adequate standard of living for its
  naturals within its sovereign borders

12
Is the myth true?

• Population mobility across physical space has
  been a constant of human history for as long as
  there has been human history
• Within large countries, like the USA, there is
  massive gross and net labor mobility over
  timethe emptying out of the rural middle
• The borders created by colonialists were not
  driven by the logic of viable entities
• No deep reason from economic theory to suppose
  this is so
• Are we sure there are no ghost countries?

13
The emptying of the heartland (only green shaded
counties had substantial population increase over
a 60 year period)
14
Massive Internal Mobility Contiguous regions of
the USA are a third their demographic
counter-factual size
15
What I did not say

• The usual discussions of sending country
  impacts (remittances, brain drain) are driven by
  place based thinking
• Income per natural is people based thinking that
  is the natural way to think
• We are swimming in an ideology of
  nationalismthat may or may not continue

16
And social change takes time.. But can be complete