Labor Migration

Theories of Migration

G. Borjas, in the work “Economic Theory and International Migration”, published in “International Migration Review” (1989), wrote:

“Neoclassical economic theory assumes that individuals maximize utility: individuals “search” for the country of residence that maximizes their well-being […] the search is constrained by the individual’s financial resources, by the immigration regulations imposed by competing host countries and by the emigration regulations of the source country. In the immigration market the various pieces of information are exchanged and the various options are compared. In a sense, competing host countries make “migration offers” from which individuals compare and choose. The information gathered in this marketplace leads many individuals to conclude that it is “profitable” to remain in their birthplace (i.e., they find it expensive to migrate to another country). Conversely other individuals conclude that they are better off in some other country. The immigration market nonrandomly sorts these individuals across host countries.”

And added later:

“It is important to note that although the idea of an immigration market is somewhat novel in the immigration literature, the notion that different agents are considering the allocation of resources among alternative uses and that this allocation is guided by a market basically defines economics. Formally, there is little difference between the problems of allocating individuals among countries and the problem of allocating individuals among jobs. In both problems, individuals consider a number of options to which they can allocate their time.”

Years later, in “The Analytics of the Wage Effects of Immigration”, published as the National Bureau of Economic Research Working Paper No. 14796 (2009), Borjas explained:

“The theory unambiguously predicts that the short run wage effect of immigration will be negative and numerically important, even after accounting for a wide array of immigration-induced feedback and scale effects. If one is to believe the empirical claim that immigration wage effects are negligible even in the short run, the theoretical implications of factor demand theory need to be dismissed and the entire apparatus thrown by the wayside. We are then left without a framework for understanding or predicting how immigration influences labor market conditions in sending and receiving countries.”

Resources

See Also

• Migration
• Internal Migration
• Immigration Law

Global political economy, benefits system, domestic workers, economic globalization, workforce

Further Reading

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