Moving people rather than money

As we have mentioned before on this blog, one big idea in development that is slowly building momentum as a concept, if not as a reality, is a focus on the movement of people to better places to live and work. One of our research volunteers, Shaun Raviv, recently took leave from Giving What We Can to work on a piece on how migration could reduce poverty which was just published in The Atlantic.

"A very large percentage of people who have gone from extreme poverty to relative financial stability have done so by moving across borders. So why don't we just let more people move?" It does not sound very sexy, but here’s why it is sexy: According to one economist, it is "the biggest arbitrage opportunity in the world” and its upside is “the rapid elimination of absolute poverty on earth."

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"To prove the economic power of open borders, supporters often turn to the work of Michael Clemens, a development economist and one of the strongest voices for loosening border restrictions. Clemens is not an open borders advocate, but his research and writings make it very clear that movement of people across international borders should be a much higher priority than it is now. He is, he told me, "in favor of a vastly more sensible way of regulating movement," if not "a utopia of completely free movement." Based out of the Center for Global Development, a think tank in D.C., he has spent much of the past half-decade compiling international labor mobility statistics that are, as he says, "gasp-inducing."

"Barriers to emigration may--according to Clemens's paper--"place one of the fattest of all wedges between humankind's current welfare and its potential welfare." Though he affirms that the research on migration's effects is far from complete, what Clemens has found "suggests that the gains from reducing emigration restrictions are likely to be enormous, measured in tens of trillions of dollars." Remove all remaining barriers to trade, says Clemens, and all remaining barriers to capital flow, and it still wouldn't compensate for the inefficiencies created by current global labor mobility restrictions. His research indicates that allowing free movement of all people across international borders could double world GDP."

"According to Clemens, we are all victims of an epic intuition fail. "Development is about people, not places," he has said many times over, and often the best way to make a person richer is by allowing them to move to another place. We don't really care about helping poverty-stricken Liberia, we care about helping poverty-stricken Liberians. It sounds almost too simple at first: A very large percentage of people who have gone from extreme poverty to relative financial stability have done so by moving across borders. So why don't we just let more people move?"

I recommend reading the whole thing. Now that Shaun has finished working in his article he is continuing to write for us, including looking at the work of CITA  which helps poor Mexicans work temporarily as farm workers in the USA, where they receive much higher wages.

The piece also prompted a comment which clearly raises many of the most popular criticisms of open, or at least more porous, borders:

"Restricting immigration is necessary to avert the destruction of the high-capital-to-worker society which is uniquely conducive to technological progress. Even if mass immigration may please some poor immigrants in the short run, it is 'eating the seed corn.' As commenters have pointed out to you before, virtually all the world population growth in the last two centuries has been enabled by the diffusion of technology from advanced countries to poor ones (and one reason most formerly-poor countries are still poor is that they put nearly all their economic growth into population growth rather than capital accumulation, so they stayed near the Malthusian limit!). Transforming all the advanced countries into poor countries by mass immigration will kill the goose that lays the golden eggs."

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"Also, there are diminishing marginal returns to immigration. The first few poor immigrants may enjoy big wage gains over their home-country wages (though higher cost of living in rich countries will mitigate those gains) but as more immigrants arrive to compete down wages and fill all the jobs enabled by the available industrial capital, each new immigrant gains less and less over staying home."

We will have to deal with potential downsides like this as we continue to investigate whether migration promotion can compete with our top recommended charities.

GiveWell also recently published a 'shallow' review of the potential benefits of migration, though only seasonal migration within poor countries. They offer this cautious summary:

"What is the problem? Domestic seasonal migration may carry large benefits for migrants and their families, but some people who might benefit from migration may not be taking part."

"What are possible interventions? A funder might support or expand the micro-credit or conditional cash transfer migration support programs that have been studied in Bangladesh, or fund more studies of the impact of such programs in different settings to help address the question of generalizability."

"Who else is working on it? The authors of the one randomized study to date are planning replications in other countries. It is unclear whether the partner organization from the study will be expanding the program studied to other parts of Bangladesh."

Far larger wage and welfare differences for a given person are found between countries than within them, so I expect we will focus almost exclusively on opportunities for international migration.