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INTERNATIONAL MIGRATION |
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Problem |
In theory allowing free international migration within global labor markets allows employers to boost productivity resulting in net gains in host country income. In practice, voters in high income countries generally frustrate employer freedom to hire abroad citing net losses to workers. The problem is further complicated by sponsored migrants tendency to distort markets due to their inability to respond to wage signals from other employers. |
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Partners and Sponsors |
United
Nations ILO, Geneva. MIGRANT
Division. Manolo Abella
(Chief of MIGRANT). |
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Challenge |
Find a free market
solution to let employers reap the productivity benefit from decreasing their
costs while boosting the income of native workers to the point where their
interests become aligned with their employers. |
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Customized Toolkit |
For this problem we chose an approach
using Coasian analysis which is a mainstay of
neo-classical economic theory. We adapted it to the problem at hand by
changing the variables of the problem given to us (borders as market barriers
to entry, work visas as government issued commodities) to a set of variables
which better invited market solution (citizenship as a salable right to
invite migrants, tradable work permits as market to be commoditized). |
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Solution |
Native workers will not support programs which lower their total incomes. Yet, migration can be counted upon to produce a reliable net benefit in host countries only if it is allowed to decrease wages. Thus the solution is to realize that total income must rise while wage income is allowed to fall. This suggests that any natural free market solution must involve a natural income stream to host country workers which has previously been obscured or hidden. We then discover that if the (highly valuable) right of host country citizens to block access to labor markets is properly converted into a salable right, workers are made better off (since a salable right is always more financially valuable than a non-salable one). We thus convert the rights to preferential labor market access into rights of workers to license migrant work permits to employers. We find that with a little bit of care the market will now return an efficient solution with all parties being made better off. |
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Publications |
'Migration
for the Benefit of All'
in International
Labor Review, Vol. 141 (2002), No. 3., pg. 225 |
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Contact |
If you are interested in this topic, we invite
you to contact us at migration@eric-weinstein.net. |
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