Neoclassical Economics: Macro-Theory

- International migration is caused by geographic differences in the supply of and demand for labor

Assumptions and propositions of model

- International migration caused by differences in wage rates between countries

- International migrants influenced primarily by labor market mechanisms; other kinds of markets do not affect migration

Segmented Labor Market Theory

- International migration stems from the intrinsic labor demands (pull factors) of modern industrial societies

- Immigrants satisfy need to fill jobs at the bottom of the occupational ladder that are solely for income and have no implications for status or prestige

- Bifurcation of the labor market into the capital-intensive primary sector and the labor-intensive secondary sector promotes migration because native workers avoid the low wages and instability of secondary sector jobs

Assumptions and proposition of model

- International labor migration is largely demand-based and is usually initiated through recruitment by employers in developed societies

- Wage differentials not necessary for migration to occur

World Systems Theory of Migration

Because political power is unequally distributed across nations, the expansion of global capitalism acted to perpetuate inequalities and reinforce a stratified economic order

- The penetration of capitalist economic relations into non-capitalist or pre-capitalist societies creates a mobile population that is prone to migrate

- For instance, the “brain drain” serves to develop underdevelopment in poor countries

 Assumptions and propositions of model

- International migration is a natural consequence of capitalist market formation in the developing world

- The international flow of labor follows the international flow of goods and capital, but in the opposite direction

- International migration especially likely between past colonial powers and former colonies due to cultural, linguistic, administrative, investment, and transportation linkages

- Migration has little to do with wage and employment differentials between countries

Neoclassical Economics: Micro-Theory

- Individual rational actors decide to migrate because a cost-benefit calculation leads them to expect a positive net return (usually monetary) from movement

Assumptions and propositions of model

- International movement stems from international differential variation in both earnings and employment rates

- Individual characteristics that increase the likely rate of employment in the destination will increase the likelihood of migration

- Individual characteristics, social conditions, or technologies that lower migration costs increase the net returns to migration; thus individuals within the same country can display very different proclivities to migrate

- Markets other than the labor market do not directly influence the decision to migrate

New Economics of Migration theory

Migrations decisions are not made by isolated individual actors, but by larger units of related people—typically families or households—in which people act collectively to maximize expected income and to minimize risk

- In most developed countries, risks to hh income are minimized through private insurance and credit markets, but in developing countries these institutional mechanisms for managing risk are imperfect, absent, or inaccessible

- This theory is supported by empirical evidence showing that the acquisition of a home is probably the single most important motivation for international migration prevailing in the world today

Assumptions and propositions of model

- Families, households, or other culturally defined units of production and consumption are the appropriate units for migration research, not the individual

- A wage differential is not a necessary condition for migration to occur

- Markets other than then labor market can influence migration decisions

Cumulative Causation theory of migration (continuation)

- Each act of migration alters the social context within which subsequent migration decisions are made

- 7 ways in which migration is affected in a cumulative fashion:

1. expansion of networks,

2. distribution of income,

3. distribution of land,

4. organization of production,

5. culture of migration,

6. distribution of human capital, and

7. social labeling

Propositions of theory

- Social, economic, and cultural changes brought about in sending and receiving countries by international migration give a movement of people a powerful internal momentum resistant to easy control or regulation

- Cumulative migratory experience in the population follows an S-shaped curve, starting slowly, rising rapidly, and then reaching an upper asymptote

- Once immigrants have entered a type of employment in sufficient numbers it may be difficult to recruit native workers due to labeling of the job as “immigrant

“Labor migration: Theory and reality.” In The Unsettled Relationship: Labor Migration and Economic Development. Edited by Demetrios Papademetriou and Philip Martin.

Reviews the theory and empirical research on the association between migration and development in sending communities

Balanced growth theory suggests that emigration should lead to a narrowing of income differences between sending and receiving countries

- Furthermore, emigration should be self-stopping because wages rise as people leave and remittances promote development and new jobs

Asymmetric development theory suggests that emigration increases differences between sending and receiving countries for many reasons, including . . .

- Migrants don’t want to return, their remittances are used unproductively, they retire upon their return, skills learned abroad aren’t useful back home, children in sending countries don’t value education because they can make more at a low skilled job abroad, etc.

- In reality, the major effects of emigration on development tend to be negative; these effects can be linked to what Martin terms the “3 R’s”

Recruitment: Employers tend to recruit the best workers

- Would this change if recruitment were government regulated?

Remittances: Remittance rarely promote economic development

- Would this change if local infrastructure channeled this money more effectively?

Returns: Although formal recruitment policies often specify limited duration of work, many migrants stay abroad

Theory that account for the perpetuation of migration

                       Social Capital Theory

- Various resources, actual or virtual, accrue to an individual or group by virtue of possessing a network of relationships and serve to lower the costs of migration

- For instance, migration networks are an important source of social capital

Assumptions of theory

- Once begun, international migration tends to expand over time until network connection have diffused so widely in a sending region that all persons who wish to migrate can do so without difficulty

- As migration becomes institutionalized through the formation of networks it becomes progressively independent of the factors that originally caused it

“What’s driving Mexico-US migration?  A theoretical, empirical, and policy analysis.” The American Journal of Sociology, 102(4), 939-999.

Main purpose of paper is to test the major theoretical frameworks of migration against each other in the case of migration between the US and Mexico

- Frameworks examined include neoclassical economics, social capital theory, new economics theory, segmented labor markets theory, and world systems theory

- Authors look at the factors that predict initial move to the US, perpetuation of movement once it’s begun (repeat migration), and return migration to Mexico

Initial move to US

- Social capital (knowing friends or relatives who have migrated) biggest predictor of making first undocumented trip to US

- New economics theory also supported; possessing capital in Mexico reduces odds of migrating to US

- US-Mexico wage differential does predict odds of migration (in accordance with neoclassical economics) but the effect is quite small

- Economic growth in US does predict increased migration (in accordance with segmented labor market theory)

- World systems theory not supported

- Fewer factors predict initial documented migration to the US, probably because legal migrants quite scarce in data

Subsequent moves to US

- Accumulating human capital and social capital in the US increases the odds of making a return trip

- In accordance with new home economics theory, accumulating capital in Mexico reduces odds of making a return trip to the US

Return migration to Mexico

- Accumulation of human and social capital in the US strongly deters returning to Mexico

- Migrants actually less likely to return to local communities in Mexico with high wage rates (in contrast with neoclassical economics)

- In sum, social capital theory and the new home economics theory are much better predictors of migration than neoclassical economics theory

Worlds in Motion: Understanding International Migration at the End of the Millenium. Clarendon Press: Oxford.  Chapter 2: Contemporary Theories of International Migration.

Theories that account for the initiation of migration

Neoclassical Economics: Macro-Theory (Todaro 1970; 1976)

International migration is caused by geographic differences in the supply of and demand for labor

Assumptions and propositions of model

- International migration caused by differences in wage rates between countries

- International migrants influenced primarily by labor market mechanisms; other kinds of markets do not affect migration

Neoclassical Economics: Micro-Theory (Borjas 1989; 1990)

Individual rational actors decide to migrate because a cost-benefit calculation leads them to expect a positive net return (usually monetary) from movement

Assumptions and propositions of model

- International movement stems from international differential variation in both earnings and employment rates

 - Individual characteristics that increase the likely rate of employment in the destination will increase the likelihood of migration

 - Individual characteristics, social conditions, or technologies that lower migration costs increase the net returns to migration; thus individuals within the same country can display very different proclivities to migrate

 - Markets other than the labor market do not directly influence the decision to migrate

New Economics of Migration (Stark and Bloom 1985) Migrations decisions are not made by isolated individual actors, but by larger units of related people—typically families or households—in which people act collectively to maximize expected income and to minimize risk

- In most developed countries, risks to hh income are minimized through private insurance and credit markets, but in developing countries these institutional mechanisms for managing risk are imperfect, absent, or inaccessible

- This theory is supported by empirical evidence showing that the acquisition of a home is probably the single most important motivation for international migration prevailing in the world today

Assumptions and propositions of model

- Families, households, or other culturally defined units of production and consumption are the appropriate units for migration research, not the individual

- A wage differential is not a necessary condition for migration to occur

- Markets other than then labor market can influence migration decisions

Segmented Labor Market Theory (Piore 1979)

- International migration stems from the intrinsic labor demands (pull factors) of modern industrial societies

- Immigrants satisfy need to fill jobs at the bottom of the occupational ladder that are solely for income and have no implications for status or prestige

- Bifurcation of the labor market into the capital-intensive primary sector and the labor-intensive secondary sector promotes migration because native workers avoid the low wages and instability of secondary sector jobs

Assumptions and proposition of model

- International labor migration is largely demand-based and is usually initiated through recruitment by employers in developed societies

- Wage differentials not necessary for migration to occur

World Systems Theory (Wallerstein 1974; 1980)

- Because political power is unequally distributed across nations, the expansion of global capitalism acted to perpetuate inequalities and reinforce a stratified economic order

- The penetration of capitalist economic relations into non-capitalist or pre-capitalist societies creates a mobile population that is prone to migrate

- For instance, the “brain drain” serves to develop underdevelopment in poor countries

Assumptions and propositions of model

- International migration is a natural consequence of capitalist market formation in the developing world

- The international flow of labor follows the international flow of goods and capital, but in the opposite direction

- International migration especially likely between past colonial powers and former colonies due to cultural, linguistic, administrative, investment, and transportation linkages

- Migration has little to do with wage and employment differentials between countries

Theories that account for the perpetuation of migration

Social Capital Theory

- Various resources, actual or virtual, accrue to an individual or group by virtue of possessing a network of relationships and serve to lower the costs of migration

- For instance, migration networks are an important source of social capital

Assumptions of theory

- Once begun, international migration tends to expand over time until network connection have diffused so widely in a sending region that all persons who wish to migrate can do so without difficulty

- As migration becomes institutionalized through the formation of networks it becomes progressively independent of the factors that originally caused it

Cumulative Causation (Massey 1990)

- Each act of migration alters the social context within which subsequent migration decisions are made

- 7 ways in which migration is affected in a cumulative fashion:

1. expansion of networks,

2. distribution of income,

3. distribution of land,

4. organization of production,

5. culture of migration,

6. distribution of human capital, and

7. social labeling

Propositions of theory

- Social, economic, and cultural changes brought about in sending and receiving countries by international migration give a movement of people a powerful internal momentum resistant to easy control or regulation

- Cumulative migratory experience in the population follows an S-shaped curve, starting slowly, rising rapidly, and then reaching an upper asymptote

- Once immigrants have entered a type of employment in sufficient numbers it may be difficult to recruit native workers due to labeling of the job as “immigrant"

“The new Americans: Economic, demographic, and fiscal effects of immigration.”

- In 1995, a panel of experts at the NRC was commissioned to answer the following 3 questions:

1. What is the effect of immigration on the future size and composition of the US population?

- Population projections suggest that immigration will account for 2/3 of the growth of the US population by 2050

- Immigration will affect the age distribution of the population (for instance, large increases in school age children)

- The size of the Asian-ancestry and Hispanic-ancestry populations will grow

2. What is the influence of immigration on the overall economy?

- Authors expect gains to the US economy as a whole, even though certain segments of the population may not benefit

- Higher-skilled domestic workers and the owners of capital will likely benefit

- Low-skilled domestic workers who compete with immigrants for jobs may not

- These negative effects would not necessarily be concentrated at the local level, because domestic workers would likely migrate out of areas where immigrants move in search of work

- Immigration is unlikely to have a very large effect on relative earnings or GDP per capita

3. What is the fiscal impact of immigration on federal, state, and local governments?

- Immigrants increase the tax burden on native households, especially in states where more immigrants live

- This is because immigrant-headed households tend to have more school-age children, are poorer, and have lower incomes and pay lower property taxes

- However, the economic characteristics of different generations of foreign-born residents vary substantially; like native-borns, the young and old tend to be a fiscal burden while working-age individuals tend to be net-payers

Heaven’s Door

Chapter 1: Reframing the immigration debate

- 10 “symptoms” of the immigration debate

1. Absolute number of current immigrants at an historic peak (although US population larger too)

2. Relative skills/economic performance of immigrants has declined

3. Immigrant earnings lag

4. Change in nation of origin (1950s: majority Europe and Canada, 1990s: latin America and Asia)

5. Immigrants effects on wages/economic opportunities for elast-skilled US workers (negative effects diffused all over US)

6. Effects in specific states with more generous welfare

7. Small measurable economic gains (cheaper goods and services diffused over all consumers, but difficult to measure)

8. Ethnic skill differentials do not close across generations

9. Ethnic capital (skills of entire group spill over to individuals)

10. Ethnic ghettos (like black ghettos) foster urban underclass

Chapter 2: The skills of immigrants

- Immigrants of 1960 less likely to be hs dropouts than natives; immigrants of 1998 almost 4 times as likely to be hs dropouts than native born

- These lower skill levels are accompanied by a widening wage gap upon entry to US

- However, we must consider that wage inequality in general has increased since 1980s (deunionization of American labor force, skill biased technology change (ex: introduction of PC increases the productivity of skilled workers more than unskilled), globalization of economy, etc.)

- We also must consider whether economic assimilation is a good thing

- Acquiring skills valued by US employers is good because it places less burden on the welfare state by reducing immigrant underclass, but the more immigrants look like US natives, the less natives benefit (complementary perspective)

Chapter 4: Labor market impact of immigration

- In the short run, low-skilled immigrants drive down wages of low skilled native borns and perhaps increase wages of complementary workers, but in the longer run concentrated immigration benefits capitalists (relocate to immigrant heavy cities) and causes native borns to migrate within US

- One methodological problem is that it’s difficult to tease apart whether immigrants cause economic improvements, or if they’re attracted to cities with growing economies

Chapter 5: Economic benefits from immigration

- Borjas argues that African Americans are biggest losers with regards to immigration because:

- Employers are the primary beneficiaries of immigration, but Blacks own small share of capital stock and are thus less likely to be in hiring class

- Immigrants compete with blacks in low-skilled labor market

Chapter 6: Immigration and the welfare state

- More recent immigrants more(less?) likely to use welfare

- Longer immigrants are in US, the more likely they are to use welfare (better knowledge of the US welfare system)

- Inconclusive evidence about whether immigrants “pay their way” or not

- Important to keep in mind that throughout discussions of assimilation and comparison of immigrants by date of entry, most analyses use repeated cross-sections and not longitudinal data

-Must think about who isn’t represented in these samples

Chapter 10: The goals of immigration policy

- Several potential strategies for selecting immigrants: family ties (current US emphasis), country of origin (past US emphasis), SES characteristics (Canadian points system), refugees

- Discussion of open market for visas (sliding scale for price based on sending country GDP): would increase skill level (although employers seeking less skilled workers would likely find ways around this), but there are moral issues (should liberty be for sale)

- Borjas acknowledges that evaluating immigration from a “what are the economic benefits for the US” perspective is only one way

Chapter 11: Proposal for an immigration policy

- Borjas argues that the US should adopt a policy that favors skilled workers (higher skilled pay a larger proportion of their income as taxes, are less likely to be on welfare, and increase productivity of US firms)

- Argues in favor of a points system

- More diversity in immigrant sending countries could reduce ethnic enclaves

Remaking the American Mainstream: Assimilation and Contemporary Immigration.

Chapter 1: Rethinking immigration

- Many of the features of the old assimilation concept are now largely rejected in the literature; these features include . . .

Seeming inevitability of assimilation

- Elevation of the culture of middle-class, Protestant whites to the standard by which other groups should be assessed and aspire

- Minority group expected to change completely, while majority group expected to be unaffected

- The ethnic or racial community played no positive role

Alternatives to this old assimilation model

- Pluralism and transnationalism suggest that ethnic diversity will flourish in the modern world, driven by advances in the global economy

- The choice to have multiple ethnic identities will no longer result in a loss of the advantages once accorded exclusively to the mainstream

- Segmented assimilation theory suggests that members of the second and third generation immigrant groups will be incorporated into American society as disadvantaged minorities

- Alba and Nee argue that this theory overlooks the variation in outcomes across different immigrant groups

- Alba and Nee assert that the traditional view of assimilation is still quite viable, but with some tweaks

- Believe that ethnicity should be thought of as a social boundary and that assimilation, as a form of ethnic change, can occur on either the minority or majority side of this boundary

Chapter 6: Evidence of contemporary assimilation

- Assimilation must be thought of as a multigenerational process

- Language usage is a good proxy for assimilation

- The three-generation model of language assimilation asserts that, in general, by the third generation English will be the only language spoken in the home

- Socioeconomic assimilation more variable across ethnic groups

- Groups who migrate with more education tend to have children who are at least as educated as the native population

- Groups who come as labor migrants tend to have children who are more educated than the first generation, but less educated than the native population

- Residential assimilation more difficult for those with black skin color (ex: Afro-Caribbeans)

The Age of Migration: International Population Movements in the Modern World.” Chs. 1, 2, 4, and 6.

Ch.1: Introduction

- Since 9/11, population movements have been viewed with much more scrutiny

- Very difficult to tell how many international migrants there are in the world

- A report by the International Organization for Migration (IOM) indicated that the number of migrants doubled between 1965 and 2000, from 75 million to 150 million

- Over 2% of the world’s population has lived outside its national borders for at least 12 months

- Most likely there has been a remarkable upsurge in illegal migration in recent decades, but again, it’s difficult to tell

Certain general tendencies of world migration in recent years include. . .

 - The globalization of migration; i.e. the tendency for more and more countries to be affected by migration

- The acceleration of migration in all major regions of the world

- The differentiation of types of migration (labor, refugees, family reunification, etc.) within the same country at the same time

- The feminization of migration; i.e. women migrating not only for family reunion, but also as labor migrants (major example: Filipino women to Middle East)

- The growing politicization of migration

Ch. 2: The migratory process and the formation of ethnic minorities

3 main theories of why people migrate

1. Economic (push-pull) theories suggest that certain factors compel people to leave one area while certain pull factors attract them to another

- Push factors include demographic growth, low living standards, lack of economic opportunities, and political repression

- Pull factors include demand for labor, availability of land, economic opportunities, and political freedom

- Economic theories have been criticized as too individualistic; empirical studies cast doubt on hypothesis that individuals migrate to maximize economic utility

2. Historical-structural theories suggest that rich capitalist countries exploit poorer countries by recruiting their cheap, foreign labor

3. Migration-systems theory takes an interdisciplinary approach and suggests that migration is the result of macro-level structures (such as a history of colonization or trade between 2 countries) interacting with micro-level structures (such as individual desire for economic gain, informal networks of friends and community members, etc.)

Emergence of discourse on transnationalism

- Globalization and improvements in technology have led to immigrants becoming attached to both new home and country of origin

- In light of transnationalism, migrants will likely maintain closer ties to countries of origin in the future

Discourse on the formation of ethnic minorities

- Minorities are created by their subordinate position in society and a sense of collective consciousness

Ch. 4: Migration to developed countries since 1945

 3 major migratory flows 1945-1970

 1. Migration of workers from the European periphery to Western Europe, often through “guestworker systems”

 - For instance, France and West Germany recruited temporary foreign workers

2. Migration of colonial workers to former colonial powers

 - For example, Irish in GB and N. Africans in France

3. Permanent migration to North America and Australia, at first from Europe and later from Asia and Latin America

 - Often migration flows began with temporary recruitment (ex: Bracero system of recruiting Mexicans to do agrarian labor in California and Texas) but migrants settled permanently

- One common feature of migratory movements 1945-1970 is the predominance of economic motivations

Since 1970 many shifts have occurred in migratory trends, including. . .

- Transition of many Southern and Central European countries from places of emigration to places of immigration

- In Italy, foreign workers increased from 300,000 to 1.4 million 1981-2001

- Recruitment of foreign labor by oil-rich countries

- Increasing international mobility of highly qualified personnel

- Proliferation of illegal migration and legalization policies

- Attempts in the US to limit migration (primarily from Mexico) have included measures such as high fences, video surveillance and border patrol, and denying welfare benefits to illegals

Replacement migration in Western Europe is a big issue at the turn of the century

- UN population report in 2000 suggests that extremely high levels of immigration would be needed to achieve replacement levels in most countries

Ch. 6: Next waves: The globalization of international migration

- Objective of chapter is to describe current trends in international migration to, from, and within the Arab, African, and Latin American regions

Arab region

- Morocco and Turkey have largest population of expatriates living in the EU

 - Many Arab workers from poorer regions flock to the oil industry in Libya, Iraq, Kuwait, Saudi Arabia, and the UAE

 - Gulf War transformed Iraq from region to immigration to one of emigration

 - Some, but much smaller, migration of Arabs to non-oil producing states

Africa

- Africa has the world’s most mobile population

- Migration often a way to escape poverty/starvation

- Many zones have freedom of movement policies, but depending on political environment migration may or may not be tolerated

Latin America and the Caribbean

- 4 areas of migrants:

Southern cone w/ Europeans,

Andean with Indians and mestizos,

Latin America with Indians and mestizos, a

nd Caribbean with Africans

- Seasonal labor migration very common

- Poor economies in the 1980s ->immigration to the US, Canada, and Europe

 classic model explaining rural to urban migration in developing countries that suggests that time and perception explain seemingly illogical moves.

In urban areas, wages are higher than in rural areas even in times of high unemployments, especially for young people it makes sense over the long term, the perception of wages and ideas about how they’ll do in the labor market, this attracts migrants to cities (Utility maximation for individuals). 

This is contrast to Stark Odee - new household theory, - individualist model – utilization maximation for the hh.  Decisions are made at a household level, more appropriate in developing country.  Spawned different theories about why people move.  (Utlity max vs risk mim vs smoothing (consistant life standard – even if not the best life) By sending some hh members and keeping some at home, it diversifies your situation (portfolio).

Stark & Odee

(see Stark and Bloom)

new household theory, - individualist model – utilization maximation for the hh.  Decisions are made at a household level, more appropriate in developing country.  Spawned different theories about why people move.  (Utlity max vs risk mim vs smoothing (consistant life standard – even if not the best life) By sending some hh members and keeping some at home, it diversifies your situation (portfolio).

Borjas 1999

proposes idea of ethnic capital – ethnicities have relatively stable transmission of resources across generations

different groups have different standings and class ideas associate with them, used in explaning ideas about Asian migrants.

Zhou