Trade Diversion

“Would Americans put up with a program that inhibits them from working in London or Paris? Skilled African migrants don’t need international organizations suggesting restrictions on where they should live and work either.” – Laura Freschi

Michael Clemens in the Washington Post on Haiti and immigration:

In research I conducted with economists Claudio Montenegro and Lant Pritchett,we compared how much Haitians earn in the United States vs. Haiti. A moderately educated adult male, born and schooled in Haiti, typically enjoys a standard of living more than six times greater in the United States than in his homeland. In other words, U.S. policy wipes out more than 80 percent of a Haitian’s earning power when it keeps him from coming to the United States. This affects everything from the food he can buy to the construction materials he can afford. The difference has nothing to do with his ability or effort; it results purely from where he is.

HT: MR.

Giovanni Peri & Francisco Requena have a new NBER working paper:

There is abundant evidence that immigrant networks are associated with larger exports from the country where they settle to their countries of origin. The direction of causality of this association is less clearly established… Using micro data on individual trade transactions from Spanish provinces between 1995 and 2008 and data on the stock of immigrants in those provinces by country of origin… we find that immigrants significantly increase exports (elasticity of 0.10), that the effect is almost entirely due to an increase in the extensive margin and that the effect is somewhat stronger for differentiated goods.

Gallup finds about 16% of the world’s adults would like to move to another country permanently if they had the chance. [Note that the map is misleading, as the regional average response is imputed onto all countries in the region.]

HT: Richard Florida.

The Financial Times has multimedia coverage of the impact of the crisis on migrant workers:

The economic downturn has inevitably hit migrant workers hard. Here, reporters from the FT’s foreign bureaux investigate the plight of migrants from Poland and the US to Brazil and China, to see which groups are returning home and which are finding innovative ways to survive the downturn abroad.

• Downturn slows tide of US-bound workers, by Matthew Garrahan
• Families struggle to survive as flow of dollars dries up by Adam Thomson
• Downturn hastens Nigeria’s ‘brain gain’, by Matthew Green
• Thoughts turn to home for white South Africans by Richard Lapper
• Sun sets on migrants’ Japanese dreams by Lindsay Whipp and Jonathan Wheatley
• China schools offer parents incentive to stay put by Tom Mitchell
• Downturn puts paid to Polish mobility by Jan Cienski
• Ukrainians forced to cross border for work by Jan Cienski

Hat tip: Laurence.

Gary Becker wants to charge immigrants $50,000 to enter the United States. He thinks that letting a large number of immigrants come at that price would be preferable to the current quota, which effectively sets the price to infinity for some immigrants.

The crazy thing is that the international labor market is so distorted that migrant laborers are estimated to gain something like $10,000 – $17,000 annually (Lant Pritchett, Let Their People Come), so many might be willing to pay $50,000. But for this proposal to have any credibility, we’d need loans so that immigrants could purchase this massive increase in lifetime earnings. And what would impoverished immigrants pledge as collateral on the loan? This missing market seems crucial, and Becker’s offhand comments (”along the lines of student loans. There would be some role of government because there would have to be some enforcement provision”) aren’t very convincing.

Oddly, the only reason to offer such a proposal is to try to buy off public opposition to increased immigration, but Becker admits that it is a political non-starter.

HT: Emmanuel.

I haven’t examined this issue at all, but Chris Cook tells a plausible story:

Britain’s Home Office operates a surprising policy: helping Manchester United, Arsenal, Chelsea and Liverpool to dominate football’s Premier League whilst also inflating footballers’ wages, so pushing up ticket prices. These all flow from its ill-considered immigration rules.

This would not be such a problem if the government were to confine its attention to the beautiful game. But, now, it is applying the principles that inform its immigration rules for footballers more widely. Under its newly-tightened system, companies can hire non-European staff only if they meet thresholds for skills and training to enter the country.

In football, the rules have long allowed non-Europeans to play professional football in the UK only if they have played internationally, representing a country whose national team is in the world top 70. Rich teams, such as Chelsea, can improve their midfields by hiring Brazilian World Cup winners.

But poorer teams near the bottom of the Premier League cannot shop in that market. For the most part, they are stuck with what they can scrape together from Europe. The result is that weaker teams suffer, particularly when trying to fill specialised positions – good left-backs are rare. In addition, since lousy European players do not face competition from similarly lousy non-Europeans, their wages are driven up. So, as well as making the league competition less intense, these restrictions on the supply of workers help to pump up ticket prices for ropey teams.

NBER Digest:

Ethnic discrimination may explain a significant part of why recent skilled immigrants have much poorer prospects than non-immigrants in the Canadian labor market. In Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Resumes (NBER Working Paper No. 15036), Philip Oreopoulos estimates the effect of various individual attributes on the likelihood that a job applicant will receive an interview request. He finds that interview request rates for English-named applicants with Canadian education and experience were more than three times higher than for resumes with Chinese, Indian, or Pakistani names with foreign education and experience (5 percent versus 16 percent) — but they were no different than for foreign applicants from Britain. Employers also valued experience acquired in Canada much more than experience acquired in a foreign country. Changing foreign resumes to include only experience from Canada raised callback rates to 11 percent. And, among resumes listing four to six years of Canadian experience, whether an applicant’s degree was from Canada, or whether the applicant obtained additional Canadian education had no impact on the chances for an interview request.

Canadian applicants who differed only by name had substantially different callback rates: those with English-sounding names received interview requests 40 percent more often than applicants with Chinese, Indian, or Pakistani names (16 percent versus 11 percent). The “discrimination” was particularly pronounced in administrative, finance, and retail jobs.

Most immigrants come to Canada on a point system, which attempts to attract the most educated and experienced foreign employees, who are in demand by the industry. However, for a given level of education, the earnings gap between recent immigrants and natives is more than 50 percent. To try to understand this, Oreopoulos sent out over 6000 mock resumes to job postings in Toronto, all of which required an undergraduate degree and several years of work experience. The job postings came from a range of industries, and the mock resumes were carefully designed to reflect actual resumes supplied by recent immigrant and Canadian native job hunters. Oreopoulos randomly assigned each applicant a common Chinese, English, Indian, or Pakistani name, as well as either foreign or Canadian education and work experience and other applicant characteristics. By doing so, he was able to investigate the effect of particular attributes on an employer’s decision to call an applicant back for an interview.

Oreopoulos further finds that the evaluators’ gender and ethnicity were not driving the differences in callback rates: in fact, evaluators with Asian or Indian accents and names were slightly more likely to call back an applicant with an English name. He concludes that, for resumes listing more than five years of experience, “an applicant’s name matters considerably more than his additional education, multiple language skills, and extracurricular activities” in the Canadian labor market.

Michael Clemens wanted to study the effects of the H1-B visa lottery. But there may be no lottery this year:

For the first time in several years the H1B visa programme, once the most sought after among Indian professionals, is unlikely to reach its cap of 65,000 before the start of the 2010 fiscal with nearly 20,000 slots lying vacant thanks to the tattered US economy.

The US Citizenship and Immigration Services said it has received approximately 49,000 H1B petitions till August seven counting toward the Congressionally-mandated 65,000 cap, more than four months after it started accepting applications for visas for the 2010 fiscal begining this October.

This is in contrast to the previous years when the USCIS had to resort to computerised draw of lots as it received petitions outnumbering several times more than the Congressional mandated cap of 65,000 within the first few days after it started receiving H-1B applications.