World Wealth and Poverty'

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World Wealth and Poverty.
Lecture 8
Migration Why people move across the Globe
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World Wealth and Poverty. Lecture 8. Migration
How Much?
IN 2000 the UN estimates across the World there
were 175m migrant workers
In UK maybe 1.5m migrant workers
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World Wealth and Poverty. Lecture 8. Migration
Where and what sort?
Poor Asia to Pacific Tiger, skilled and
unskilled Poor Asia to Middle East OPEC
countries, unskilled workers Poor Asia to India
and China, skilled workers Asia to USA, skilled
workers Central and Latin America to USA and
Canada, unskilled and skilled workers Poor Asia
to Europe Africa to Middle East, Europe and USA,
skilled and unskilled workers.
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World Wealth and Poverty. Lecture 8. Migration
Why do people want to migrate?
Rosa from Mexico City
In Mexico City she earns 500 peso per week, good
job in factory
Spends 400 peso on family expenses
Family not starving but poor
Poor work conditions but member of union
campaigning for improvements
Would she do better in Los Angeles as an office
cleaner?
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World Wealth and Poverty. Lecture 8. Migration
Rosa in the USA Cost of living.
Cost of accommodation
50 Cost of food
35 Cost of daily
transport
10 Cost of clothes
05 Cost of travel to
Mexico
05 Cost of medicine etc
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115
But REMITTANCE to family worth 400 pesos at
exchange rate of 10 peso per
40
Money for herself, 100 peso at PPP exchange rate
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Taxes and other expenses
34
Total 200
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World Wealth and Poverty. Lecture 8. Migration
Rosa in LA More costs
So Rosa needs to earn 200 per week to be as
well-off financially in LA as staying in Mexico
City
But what about subjective costs Worse job
(cleaner) No employment rights, casual work,
subject to instant dismissal Unions
banned Unusual customs, no status or
citizenship Must learn English No family around
These factors reduce her UTILITY. She needs more
money to compensate for this loss of happiness
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World Wealth and Poverty. Lecture 8. Migration
Will Rosa go to LA?
Suppose she thinks she will earn 210
Not much if any any utility gain
Might however go because extra 10 dollars could
be sent back to her family and would make a big
difference (poor therefore high marginal utility
of money)
Remittance and family often very important in
decisions to migrate
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World Wealth and Poverty. Lecture 8. Migration
US wage costs of migrating subjective costs of
migrating gt Mexican wage
Neoclassical analysis of Rosas decision
If costs less than benefits then GO
i.e. if ..
US wage costs of migrating subjective costs
of migrating gt Mexican wage
.then migrate
Rosa might consider costs and benefits OVER TIME
(intertemporal theory)
e.g. she may get the opportunity to improve her
education and get a better job in the USA, giving
her better life chances.
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World Wealth and Poverty. Lecture 8. Migration
Marxian Analysis
Why are Rosas wages as a skilled worker in
Mexico less than those of an office cleaner in LA?
Primitive accumulation of capital
Spanish and US imperialism subjugated Mexican
economy
US firms advantaged by having Mexico as a low
wage economy in NAFTA
Continuous commercialisation of agriculture
dispossesses peasants keeping labour supply to
urban industry continuously rising, so putting
downward pressure on wage rates in cities
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World Wealth and Poverty. Lecture 8. Migration
Sociology
Importance of network of expatriate Mexican
workers in LA to give information and help
Importance of families in Mexican life therefore
importance of remittances
Convenience of Mexican insider groups in some
LA industries to counteract being frozen out by
existing insider groups.
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World Wealth and Poverty. Lecture 8. Migration
Psychology
Migrants often naturally adventurous people
Politically
People might be seeking to escape from
persecution ie be seeking asylum
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World Wealth and Poverty. Lecture 8. Migration
Benefits of in-migration to countries
Pre-immigration labour supply
Labour market inadequacies remedied
Wage rate
Post-immigration labour supply
supply labour increased, wage rate reduced
Reduction in wage rate
Demand for labour
Labour
economic and production bottlenecks reduced
more technical efficiency
Post immigration demand for labour
more entrepreneurship, economy grows
New ideas, inventions, arts etc improve the
technology and general culture of all inhabitants
Post-immigration labour supply
So demand for labour increased and wage rate
increased
Increase in wage rate
Pre-immigration demand for labour
The UK Treasury calculates that economic
migration to the UK adds 0.5 to the growth rate
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World Wealth and Poverty. Lecture 8. Migration
Some misconceptions about immigration
Migrants reduce wages
Migrants overload social security systems
Migrants get special treatment by the state