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summary 1 - The Economic Consequences of the International...

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The Economic Consequences of the International Migration of Labor Gordon H. Hanson NBER Working Paper No. 14490 November 2008 Summary by Naila Prieto Preview: This paper looks at the consequences of global labor mobility, the affects of sending and receiving countries and migrants’ incomes, migration policies while looking at the literature that provides these empirical works. Introduction: Pro: Burning issue of our time, in political campaigns Skilled immigrants spur innovation and technology Financial windfall in the form of remittances In receiving countries, immigration drives national politics In the developing world, more skilled have the highest propensity to migrate. Anti: Immigrants disrupt civil society, drain public coffers, lower wages International migration is contentious In low income sending countries, the wrong individuals leave (brain drain) In high income receiving countries, wrong individuals are trying to get in o Immigrants have less schooling than natives An inflow of low skilled workers increase tax burden creates political opposition to immigration. Emigration of a skilled worker can hinder economic development o Corrections could be to tax skilled worker or require receiving countries to admit more unskilled workers from the developing world. In policy, both views can’t be true: o Emigration pessimist: labor outflows are too skilled o Immigration pessimist: inflows aren’t skilled enough. International migration is like international trade, creates winners and losers Receiving vs. Sending Countries: There are vast differences in wages exist between countries which impacts labor flows and alters the distribution of income. Receiving Countries: Immigrants pay taxes, use public services changing the tax burden on native residents. Immigrants can obtain the right to vote impacting politics. Sending Countries: Emigrants corresponding fiscal and political disruption by leaving.
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Trade vs. Migration: evident in policy. Most countries belong to WTO and are committed to lowering trade barriers. Allowing greater international labor mobility raises world welfare. Moving freely across borders narrows global income gaps. Policy is determined by existing literature. A lot research has been done on how immigration affects US wages, which is only a small part of migration and not enough research has been done in other areas. Overall, there needs to be more research done in other areas so that policy makes make more informed choices. Preview: Secton 2: Summary of facts about international migration from recent data. Secton 3: Simple framework for evaluating the welfare consequences of international migration. Secton 4: Empirical research on the consequences of labor flows for incomes in sending and receiving countries and for migrants and their families.
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