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March 8, 2006
Complete Paper
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INTERNATIONAL TRADE AND MIGRATION: A MULTI-DISCIPLINARY
SYNTHESIS
J. S. BHANDARI
ABSTRACT
This paper examines the inter-relationship between migration of persons and international trade in goods and services. Trade and immigration policies, their effects and inter-dependence are examined from a variety of viewpoints across several disciplines, and an attempt is made to offer the outline of a synthesis.
The relationship between trade and migration policies is of immediate relevance to policy-makers. Unless such policies were coordinated, lawmakers might find that the desired effects of say, immigration policy might well be undone by independently chosen trade policy and conversely. The experiences of the United States United States
Careful examination of the inter-relationship between these policies is desirable in order to assess the differing policy responses chosen across continents.
INTERNATIONAL MIGRATION AND TRADE: A MULTI-DISCIPLINARY
SYNTHESIS
J. S. BHANDARI*
I: INTRODUCTION: This paper examines the inter-relationship between international migration and international trade in goods and services. Specifically, a central theme in the paper is the effect of trade liberalization upon incentives to migrate across countries and conversely, the effects of international migration upon the need for trade liberalization. Does trade policy liberalization lead to greater incentives to migrate across countries, or is such trade reform likely to dampen such incentives, in effect, replacing migration, including illegal immigration? Similarly, does a more liberalized immigration policy, create or replace international trade in goods and services between the relevant countries?
These issues are of immediate relevance to policy-makers in crafting and evaluating appropriate trade and migration policies. Unless the inter-relationship was properly understood, it is quite possible for trade reform to undo and undermine the effects of an independently chosen immigration stance. History itself provides several examples of trade and immigration liberalization occurring simultaneously at certain periods in time in certain countries, as well as, of the opposite relationship (i.e. trade liberalization coupled with immigration restrictions, as in the United States
While migration and trade have both been studied extensively in various disciplines including, law, political science, economics, sociology, demography, and international relations to name a few, their inter-relationship on both theoretical and policy levels has received very little attention.[1] In addition, the bulk of the vast literature on trade and migration is targeted to professional trade theorists, public choice scholars or labor economists and is unlikely to be easily accessible to the legal profession, to the policy-maker or to inter-disciplinarians in general. This paper is intended to fill this lacuna in the literature.
The paper analytically surveys and synthesizes the existing literature on trade and migration, in particular, their inter-relationship, from the perspective of several different disciplines. In many areas, scholarship on the trade-migration relationship is either incomplete or non-existent. To the extent possible, I have attempted to fairly deduce implications for this relationship from existing analysis in several disciplines and to marry them to present the reader (in particular, the policy-maker) with a richer framework than has hitherto existed. In this way, I offer the outline of a blueprint of a multi-disciplinary synthesis of the inter-relationship between trade and migration.
Both the scope and the intended audience for this paper are much broader than the targeted readership of previous authors. Wherever possible and for the convenience of the reader, I have attempted to precede the principal discussion in each Section by a brief roadmap. In each Section, the trade-migration relationship is specifically emphasized in order to ensure that the reader is not unduly distracted by the details of the wealth of material presented.
In what follows, Section II contains a discussion of the recent policy debates involving international migration and trade in order to set the stage for the analytical discussion to follow. I observe that while the European Union chose to address both trade and migration (along with other “freedoms”) simultaneously, the United States pursued a piecemeal approach to trade liberalization and immigration reform, both in public discourse and in legislative enactments. In Section III, historical trends in patterns of trade and cross-border flows of labor and capital are discussed. I note that despite the ceaseless current emphasis on “globalization” and integration, the belle époque of integration was, in fact, a time that ended on the eve of the First World War. For a period of some fifty years prior to that date, the Old and New Worlds experienced integration in each of trade, financial and migration flows to a far larger relative extent, than in the closing years of the last century. In Section IV, I present and discuss the principal theoretical constructs or models proposed by trade and labor economists, which may be capable of generating falsifiable hypotheses regarding the inter-relationship between trade and migration. It is noteworthy though, that as originally proposed in these disciplines, this inter-relationship has not been at the forefront of attention. This Section points out that the inter-relationship between trade liberalization and immigration reform can only be unequivocally pinned down in the simplest theoretical structures. In order to determine the contours of this relationship in more realistic contexts, much more applied and quantitative work is necessary. In Section V, I turn to a public choice or political economy framework, while Section VI examines some of the literature pertinent to trade and migration in the areas of sociology, anthropology and international relations or international political economy. Public choice analysis has dealt primarily with migration policy, rather than trade and has focused on the type of migration policy that might be preferred by the enfranchised electorate in liberal democracies. A surprising result in this context is that in many cases, the average voter prefers a limited amount of illegal migration; this preference is then articulated by the state through selective enforcement of immigration laws, both at the border and in the interior. The work of anthropologists and political scientists (among others) also provides valuable insights into migration by analysis of social networks that catalyze both legal and illegal migration, along with the role of such networks in socio-economic, linguistic, cultural, and ultimately, political assimilation and incorporation of immigrants into a host society. When sufficient new immigrants gain meaningful political membership in the host state, the very meaning of national borders and of state sovereignty may be called into question. This is the domain of international relations scholars. In Section VII, I turn to empirical evidence regarding the relationship between trade and migration. The limited empirical work that exists so far, has mainly dealt with examining the relationship between trade flows and net immigration flows in simple time-series and cross-section data. Existing empirical analysis indicates that there is no apparent relationship between trade and migration, so that liberalized trade can replace or diminish the incentives to migrate. The last Section offers some concluding observations.
II: RECENT PUBLIC POLICY DEBATES: While the relationship between trade and migration has been theoretically discussed since the 1930s, its policy implications have only come to occupy the attention of the public and policy-makers in more recent times.[2] In the United States at least, the debate appears to have had reached the level of legislators, various “watchdogs” and lobbyists, just prior to the regional trade accords between the United States and Canada, and subsequently the North American Free Trade Agreement (NAFTA).[3]The public policy debate prior to the ratification of NAFTA in the United States
The relationship between trade policy and migration however, was strangely neglected, at least during the earlier phases of the public debate. In part, this may have been due to the fact that the NAFTA accord itself included virtually no provisions regarding migration.[5] Later in the course of the debate, some proponents of the trade accord argued that increased inter-regional trade, as contemplated by NAFTA would serve to mitigate the pressures for migrate illegally to the United States from Mexico.[6] Conspicuously absent in the public discourse, was any mention of illegal immigration from Canada Mexico Canada
The separation of trade policy and migration, both in the policy debates and in the accord instruments appears consistent with two possible positions from an analytical viewpoint. Either, policy makers in the United States Mexico
To the extent that international trade theorists supported implementation of NAFTA, their evaluation appears to be the result of a general endorsement of the proposition that free trade is generally of mutual benefit to the trading economies (or, welfare-enhancing).[11] [12] A large amount of literature, primarily in the field of labor economics has attempted, especially recently, to gauge the net effects of migration, both legal and illegal, on both host and source countries.[13] Issues of particular interest to researchers have been the impact on host country wages, the distribution of income, employment, and the fiscal impact upon official finances, particularly at the state level, for states disproportionately affected by immigrant inflows.[14] Effects upon the source country have also been studied, especially in the context of development prospects for the sending country and the “brain drain”.[15]
Unfortunately, both strands of the economic literature—trade and labor—have largely proceeded independently of each another (and of other disciplines) and have mostly employed frameworks that focus separately on either labor markets or the market for traded goods (exportables and importables).[16] Research in other disciplines such as political science, sociology, demography, anthropology or international relations has also remained dichotomous in nature by focusing on migration or trade, but not both, nor on their mutual inter-relationships.[17]
More recently however, a few economists and public choice scholars have devoted renewed attention to the inter-relationship between trade and migration policies, in particular, whether trade and immigration policies are substitutes for one another or whether they are complementary to each other.[18] If substitutable, then as indicated earlier, trade liberalization alone could accomplish both free trade, as well as, reduced immigration (if these are viewed as desirable policy goals). On the other hand, if these policies are complementary, then the twin goals of free trade and immigration restrictions would necessitate reforms in both trade policy and the immigration regime, at the same time. A general conclusion that emerges is that the simple substitute relationship between trade and migration that emerges from trade frameworks or models of early vintage cannot be validated, once the stark assumptions of those models are modified.[19] Rather, the effects of trade liberalization upon incentives to migrate (of either labor or capital) and conversely, are highly dependent upon the framework or model being utilized. Clearly, additional work is called for in this area, before more informed judgments can be made, and in particular, additional empirical work is desirable to determine the applicability of various alternative structures or models to various areas (such as the New World or the Old World) at differing points in history.
The need for additional research into trade-migration linkages does not imply that it is impossible to make reasoned conjectures. Thus, the neglect of immigration reform in conjunction with implementation of the NAFTA cannot be justified on these grounds. Rather, it is to be rationalized in terms of the political accommodations that may have been expedient at the time.[20]
Arrival of foreign labor from a foreign country, particularly one that is ethnically distinguishable (such as Mexico from the US) is inevitably bound up with underlying currents of racism or xenophobia, and concerns about cultural and related dissimilarities. In addition, the physical presence of foreigners is immediately visible and apparent to the native population. On the other hand, the import of foreign goods embodying that same foreign labor is far less transparent and at least, does not arouse the same cultural and assimilative concerns. To economists, in the context of basic trade models, the end economic effects of either phenomenon can be identical. To the political scientist and sociologist, and to the anthropologist and demographer, these are entirely different processes. The political coalitions in the US
Ironically, calls for integration of trade and migration policies in the United States US
As alluded to earlier however, there is relatively little basis in either public choice theory or in economics to assume that trade and migration (labor mobility) are functionally equivalent or are substitutes, except in the very simplest trade models or constructs of early vintage. Nor does an examination of the historical evolution of trade and migration patterns in many parts of the world suggest the consistent existence of such a relationship. In fact, both modern theoretical analyses and empirical historical evidence indicates that in many cases, trade liberalization is complementary with increased international mobility of labor and capital (i.e. increased migration of labor and/or increased cross –border capital flows). As a logical matter, were it true that trade liberalization and migration are (or were) substitute policies, then that alone would imply that a trade liberalizing accord could well ignore addressing migration issues, if and only if, all that concerned policy-makers was the purely economic impact of such measures.
Events in the US subsequent to ratification of NAFTA seem to belie the substitutability hypothesis and in particular, appear to suggest that trade liberalization and increased migration (especially illegal immigration) were popularly viewed as being complementary.[28] Late in 1994, California United States California
Examination of immigration and trade legislation enacted in the US since the mid-1980s up to the present time, suggests that aside from one exception (the 1990 enactments), the immigration regime became increasingly restrictive, while at the same time, trade policy continued its already-established liberalizing trend.[31] The US engagement in trade agreements over this period, consisted of its continued participation in the multilateral 1986-94 Uruguay Round (culminating in the World Trade Organization accord in 1994, along with supplemental agreements reached in 1997), followed by the Doha Round of negotiations that commenced in Doha, Qatar in 2001. At the same time, the US United Arab Emirates Oman Middle East
While there have been no less than ninety pieces of legislation enacted into public law in the US since 1985 (many of which contain technical amendments or appropriations provisions), while others are pending, four enactments deserve mention. In 1986, Congress took aim specifically at the undocumented alien problem, and enacted the Immigration and Reform Control Act (“IRCA”).[32] For the first time in US US US
Shortly thereafter, Congress enacted the Immigration Act of 1990 (IMMACT90). The 1990 Act did not reflect any specific Congressional concern with undocumented aliens. Instead, the 1990 legislation increased the worldwide annual quota of legal immigrants to be admitted to the US US
Some years later, following the 1993 World Trade Center bombing in New York and the Oklahoma City federal building bombing in 1995, Congress further streamlined the procedures for removal of criminal aliens charged with terrorism in the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) and greatly limited the scope of habeas corpus appeals in such cases.[37] By itself, the Act was largely symbolic and by 1998 (when the AEDPA was in full effect), only about 61,000 criminal aliens were removed from the US
That year, i.e. 1996, was a particularly busy one for immigration reform in that Congress also enacted the Personal Responsibility and Work Opportunity Act (110 Stat 2105) and the Illegal Immigration Reform and Immigrant Responsibility Act (110 Stat 3009) (known by its acronym “IIRIRA”), Title V of which amended and re-incorporated the Personal Responsibility and Work Opportunity Act.[39] IIRIRA was enacted precisely ten years after IRCA and took aim at both illegal and legal immigrants. In addition to increasing appropriations for border patrol personnel, IIRIRA cut off illegal aliens from most means-tested federal public assistance programs (although States remained free to fill in the gaps to the extent of their limited fiscal capabilities). In addition, legal immigrants entering the US US USA US
The piecemeal approach employed in the US with respect to trade policy and immigration reform is consistent with the view (at least among relevant policy makers and legislators) that trade liberalization with Mexico was not likely to produce much of a favorable impact upon incentives to migrate to the US, i.e., that these policies were not substitutes.[42] Moreover, the sequential approach employed in the US Rome
It is easy to explain the piecemeal approach employed in the US US
In the next Section, I turn to an examination of historical trends in trade flows and factor flows (migration of labor and capital). Analytical constructs or models are usefully evaluated in terms of their ability, to first “explain” the historical record, and only then, in terms of their possible predictive power for the future.
III: HISTORICAL TRENDS: In this Section, I discuss historical trends and empirical regularities in the patterns of trade flows, flows of capital and in international migration of labor.[47] These trends indicate that increased trade in goods and services was accompanied by vastly increased international mobility of both capital and labor flows during an earlier historical period ending on the eve of the First World War, i.e. the observed relationship between trade and migration was complementary. However, global integration achieved during the closing years of the twentieth century was (contrary to commonly held belief) less impressive in scope and extent than in the earlier period (the belle époque). While trade and capital flows across countries registered large increased during the later period, international mobility of labor, measured in relative terms, has not kept pace with the growth in trade and capital flows by any means. Historical evidence does not support the existence of a complementary relationship between trade and immigration flows in recent times.
A: Recent Trends in Trade in Goods and Services: International flows of goods and cross-border flows of services have grown much more rapidly than output or Gross Domestic Product (GDP) in the latter part of the twentieth century. This is true whether comparisons are made, either for trade flows for most countries individually or in terms of world trade flows on a gross basis.[48] For example, world trade flows, measured in real terms, grew at an annualized rate of 4.1 percent during the 1980s and at a rate of 9.1 percent annually over the 1990s, while world real output growth over the same periods was respectively, 3.1 percent and 2.6 percent.[49] Within trade in goods and services, international trade in services has grown much more rapidly than merchandise exports and imports. Traditional services – transport, insurance and travel – account for approximately half of total trade in services, but growth in trade in newer type of services, particularly in computer and information services has been especially rapid in the 1990s and thereafter.[50]
Clearly, the much more rapid growth in trade flows compared with output, is suggestive of increased “openness” of the economies in question.[51] However, it should be noted that while most industrial economies have indeed experienced a recent increase in “openness” (as measured by the ratio of gross trade to output), it is by no means true that “openness” or globalization is exclusively a late twentieth century phenomenon. A number of historians, in particular, economic historians (such as Jeffrey Williamson, Kevin O’Rourke and others) have convincingly demonstrated the emergence and existence of a strongly integrated Atlantic economy prior to the First World War. In fact, by the early twentieth century, the industrialized world comprising the Old and New Worlds had already attained an impressive degree of openness.[52] Following this “golden” era of globalization or Belle Epoque, the industrial world underwent rapid de-globalization until after the end of the Second World War. Even after the latter world conflict, the advent of the Cold War, and the proliferation of socialist or Marxist anti-openness economic and political philosophies in the Soviet bloc and in several countries in Asia and Latin America
B: Recent Trends in Flows of Capital and Labor: Have flows capital and labor, become as internationally mobile or migratory as flows of good and services, i.e., has there been an increase in openness with respect to factor flows, similar to that observed for trade in goods and services? It is somewhat more difficult to define capital rather than labor for the former encompasses both physical capital and financial (portfolio) investment which can include transnational transactions in an ever-increasing variety of financial instruments such as stocks, bonds, options, futures, derivatives etc.[55]
Growth in cross-border foreign direct investment in the closing years of the twentieth century has been even faster than that in merchandise trade. United Nations UNCATAD FDI Database reports that annual inflows of world foreign direct investment increased approximately 400 percent between 1980 and 1990, and close to another 650 percent between 1990 and 2000.[56] Similarly, cross-border portfolio capital transactions have registered an accelerating rate of growth during the same period.[57] Thus, capital flows, whether of physical or financial capital, appear to have become much more migratory across national borders, paralleling (or exceeding) the worldwide increase in merchandise and service trade.[58]
Turning now to international migration, cross-border flows of labor have been the laggard in the globalization process that has characterized trade and capital movements over the recent period (i.e. the last decades of the twentieth century). Except for the United States Italy
Percentages of Foreign-Born and Foreign Populations in Total Population
Early 1980s Early 1990s 2001
Belgium
France
Germany
Italy
UK
USA
Canada
* Refers to 1999
** Refers to unified Germany
Source: TRENDS IN INTERNATIONAL MIGRATION (OECD, Paris, Various Issues)
The relative stagnancy in the percentages of foreign-born and foreign populations of the developed nations is all the more noteworthy in view of the sharp decline in transport and communication costs during this period and in particular, in light of the growing disparities between income levels across rich and poor nations.[60] Most of the economic literature on internal and international migration has stressed the importance of differences in expected wage levels in explaining migration flows.[61] By contrast, sociologists and researchers in other fields have emphasized “network effects” and similar “social capital” in explaining migration.[62] The relative international immobility of labor despite the increased incentives to migrate (on account perceived wage differentials, closer social “networks” etc.) can be rationalized in terms of more extensive policing of borders in most developed countries over the relevant time period.[63] [64]
It appears therefore, that in the closing years of the twentieth century, trade flows and flows of capital stood in a complementary relationship, i.e. increased trade was associated with increased cross-border capital flows. On the other hand, international migration did not exhibit a similar increase (or any appreciable increase relative to base population) over the same time period.
This pattern – increased trade and capital flows without a corresponding increase in labor flows – is in contrast to the earlier phase of globalization that occurred in the late nineteenth and early twentieth centuries. Both trade and capital flows increased sharply relative to output at that time and measured from the simple perspective of ratio of exports (or imports) to output, the European industrial countries of the time were more “open” than late in the twentieth century.[65] This observation should caution against needless exaggeration of recent trends in world integration.[66]a
C: Historical Patterns in the Nineteenth and Early Twentieth Century: Turning now to an earlier period in history (i.e., pre-World War I), exports in the industrialized world between 1870 and 1913 grew at an average annual rate of 4 percent, while output increased at a growth rate of 2.6 percent per year.[67] However, in contrast to the present period, increased goods market and capital market integration in the earlier period was also accompanied by considerable international labor mobility or migration flows. The following Tables present data on intercontinental migration flows from Europe to the New World
1871-80 1901-1910 1913
(Emigration as Percentage of Home Country Population)
Austria-Hungary
Germany
Ireland
Italy
Spain
United Kingdom
(European Immigration as Percentage of Home Country Population)
Argentina
Canada
USA
Source: Imre Ferenczi and William Wilcox, INTERNATIONAL MIGRATION ( Geneva
The following table reports the percentage of various European countries’ population in 1900 that emigrated over a 75-year period spanning 1846-1924
Percentage of 1900 Population
Austria-Hungary
British Isles ( UK
France
Germany
Italy
Norway
Portugal
Spain
Sweden
(Source: Douglas Massey, International Migration and Economic Development in Comparative Perspective 14 POP. & DEV. REV. 383 (1988).
Migration of labor as a percentage of sending countries’ population and as a ratio of host countries’ population witnessed a sharply increasing trend over the period 1870-1913. For example, Italian emigration (as a percentage of total base population), increased almost fifteen-fold (from .11 percent to 1.63 percent) over this period. Similarly, European immigration as a percentage of host country populations more than doubled in the US Canada Britain Italy Spain Portugal Norway France Germany Britain Spain Portugal
Turning specifically to immigration into the United States, I report below the figures for net immigration, US total population and the immigration rate (in percentages) for a number of years over 1880-2004.
Year Net Immigration Population Immigration Rate (%)
1880 457.257 50,155.783 0.91
1890 455.302 62,622.250 0.71
1900 488.572 75,994.575 0.64
1905 1,026.499 83,822.000 1.22
1910 1,041.570 91,972.266 1.13
1914 1,218.480 99,111.000 1.22
1960 265.398 179,325.671 0.15
1970 373.326 203,210.158 0.18
1980 530,639 226,545.805 0.23
1990 1,536.483 248,709.873 0.62
1995 720.461 262,764.948 0.27
2000 849.807 281,421.906 0.30
2004 946.142 293,656.842 0.32
NOTE: Figures are in hundreds of thousands. Rates in the last column are in percentage form.
Sources: US Census Data, Yearbook of Immigration Statistics (2004) and author’s calculations.
Figures for the United States make it clear, that even in terms of levels, the total numbers immigrants admitted to the US in last ten years falls short of levels attained almost a hundred years ago, over 1905-1914. In terms of rates, the contrast is even more telling, since the total US
The earlier period of world integration consequently, was characterized by universality of rapid integration of goods, capital and labor markets. Cross-border flows of goods and both labor and capital increased substantially, relative to output. Thus, trade, capital and migration flows were all complementary to each other during this period of globalization. In contrast, the recent phase of globalization in the late twentieth century proceeded without exhibiting a complementary relationship trade and migration of labor.[69]
Shortly subsequent to the end of the First World War, the doors of open immigration policies in the New World began to slam shut, corresponding roughly to the end of the expansion of the New Frontier in the American West and the end of the Prairie Boom in Canada. In Argentina Europe Argentina Europe
IV: TRADE AND MIGRATION: THEORETICAL UNDERPINNINGS IN ECONOMICS:
As discussed above, the observed links between trade flows and international migration have not exhibited a consistent pattern over time. In this Section, I discuss the theoretical constructs in economic theory that generate testable hypotheses about these links.[71] [72]
A: General Comments and Conclusions: The principal conclusion of this sub-section and this area of endeavor is that in a highly stylized setting with several simplifying assumptions, free trade or increased trade between nations is a substitute for international migration. However in a more general setting, and once certain stark simplifying assumptions are relaxed, the theoretical relationship between trade flows and migration is less than unambiguous and is highly dependent upon the nature of the framework of analysis. The implication of this conclusion is that further empirical work is required in order to determine the suitability of models or constructs to particular countries and contexts.[73]
Even on a casual level, the relationship between trade and migration policies exhibits inter-relationships (simultaneity) on more than one level. At a basic level, there is a two-way relationship between the policy stance and the effects of the policy. For example, immigration policy (articulated by entry quotas, for example), is itself responsive to immigration flows. Large undesired flows of immigrants precipitate a more restrictive immigration policy. In turn, restrictive immigration policy, if successfully implemented through border interdictions or deportation, affects actual immigrant inflows into the country in question.[74] This occurs both directly and indirectly through “demonstration effects” on other would-be emigrants in the source country.
Similarly, trade liberalization increases the flows of importables and exportables with consequent effects upon domestic industries producing competing goods.[75] When trade liberalization is “too” successful and leads to large increases in imports, domestic producers in import-competing industries may be expected to lobby legislators to restrict “unfair trade”.[76]
Recognition of these types of feedback effects between policy regimes and their effects has been of interest to political scientists and public choice theorists and will be discussed below.[77] Our concern in this Section though, is another type of feedback or linkage, namely between trade flows and migration flows (or more generally, factor flows). Specifically, we inquire: What is the effect of increased trade flows on incentives to migrate and conversely, what is the effect of factor flows (i.e., labor and capital flows) on incentives to trade goods and services between countries? As indicated previously, trade and migration may be conceptually viewed as substitutes, if increased trade flows reduce incentives to migrate (in other words, trade in goods can take the place of movements of labor). On the other hand, when increased trade leads to more migration, trade and migration can be said to be complements to each other.
B: Classic Vintage Models: What insights regarding the trade-migration relationship follow from the simplest theoretical frameworks constructed by trade scholars? Trade models of early vintage are unambiguous with respect to their implications for the trade-migration relationship; trade in goods is a substitute for migration of factors of production, such as labor.[78]
In any explanation of trade patterns, the starting point is to isolate the reasons for mutually profitable trade to exist. At the most basic level, the raison d’être for mutually profitable trade opportunities, is the fact that countries (or areas) are different in their comparative advantage in producing different goods and services. Differences in comparative advantage manifest themselves in differences in relative prices of goods across countries if they were not to engage in free trade.[79] A model or theoretical construct must therefore explain the reason for differing relative prices of goods across countries in the absence of trade.
Theoretical Considerations: Elementary trade theory identifies at least two such explanations; one based upon technological differences (specifically, labor productivity) across countries, and the other upon different natural endowments of labor and capital of countries. The latter model is the usual “workhorse” of elementary trade theory. This framework –known as the Heckscher-Ohlin model - assumes that countries are naturally endowed with capital and labor in differing relative proportions.[80] At the same time, goods are distinct in their technological requirements of labor and capital for production. For example, the production of aircraft is necessarily more capital intensive than development of computer software. A simple statement of the Heckscher-Ohlin prediction of trade patterns is as follows: countries will export those goods that are relatively intensive in using the factors of production with which they are endowed relatively generously. To return to the above example, if Country A is relatively well-endowed with capital compared to Country B and if good X requires relatively capital intensive methods of production (in both countries), then Country A will have a comparative advantage in the production of good X, i.e., Country A will export good X and import good Y. This follows directly because good X is relatively cheaper in Country A, compared with Country B.[81]
Standard assumptions of perfect competition, constant returns to scale etc. also ensure that rates of return on labor and capital (i.e. wage and rental rates) in the two countries are aligned with their relative abundance. Thus, in Country A, wage rates will be relatively higher as it is labor-scarce. On the other hand, labor is relatively abundant in Country B and relative wage rates in that country would be low. The incentives for migration of factors of production (labor and capital) are now perfectly clear. Unless wage and rental rates change, Country A will prove to be a magnet for immigrant labor from Country B, unless there are effective restrictions on movements of labor. At the same time, capital is expected to flow from Country A where it is relatively abundant, to Country B. In reality, capital movements may require much more supportive infrastructure (including assurances against expropriation) than labor flows. This is certainly true of movements of physical capital (i.e. direct foreign investment); on the other hand, migration of labor may require, or be facilitated by private infrastructure, such as personal contacts or social networks.
The implications of this simple framework for trade liberalization are also well-known. If free trade (or increased trade) occurs between Countries A and B, Country A expands its production of the capital intensive good X in which it possesses a comparative advantage, and conversely, Country B expands its production of good Y. Increased production of the exportable good in each country is a natural consequence of serving a larger world market, rather than the home market alone. Capital constraints and increasing marginal costs of production ensure that the process of increased production for export lead to capital becoming more expensive in Country A and labor more expensive in Country B. Thus, returns to capital) rise in Country A, while wage rates decline in Country B.
Implications for the Trade-Migration Relationship: The necessary implications for migration in the face of free trade are now readily apparent; prices of factors (labor and capital) in various countries start to converge, i.e., free trade dampens the incentives to migrate. The “push-pull” factors leading to migration of labor (and capital) are diluted. The same result would have occurred if, instead of free trade in goods, a large amount of labor were allowed to migrate Country B to A, i.e., relative wage rates in A would fall and those in Country B would rise.
In this sense, trade in goods and services works as a substitute for trade in labor and capital. Thus, in this stylized world, the official position of the US Mexico US US US
Consistency with Observed Historical Patterns: Before discussing theoretical constructs, it may be useful to inquire if the elementary vintage framework discussed above is consistent with the observed pattern of European-US migration in the late 19th century. During this period, the US America Europe US
C: Extensions of the Basic Framework: The strong substitutability relationship between trade and migration identified above is robust with respect to modifications and extensions of the basic framework. As discussed below, theoretical work indicates that the true relationship between trade and migration is complex and may be a priori, indeterminate, without knowledge of specific parameter values. Hence, empirical work designed to isolate or determine the required parameter values appears appropriate or necessary.
Extensions of the simple framework discussed above have been of at least two types. Early extensions of the Heckscher-Ohlin model retained the basic assumption of competitive conditions in all markets and focused on enriching the model by introducing the assumption that labor and capital are specialized in their usefulness and productivity in different sectors or industries.[84] Thus, for example, coal miners in Appalachia are not likely to be productive as software developers in Silicon Valley
1: Extensions: Competitive Models: The specific or specialized factor model, as indicated above, retains the basic assumption of full competition in product and factor markets. In its simplest version, there are only two factors of production as earlier, labor and capital which are specialized by industry or sector.[86] A result that follows from this framework is that the effects of trade liberalization upon incentives to migrate are ambiguous and can be shown to depend upon the effects of increased trade upon real wages of labor. In turn, the effect upon real wages depends upon weight of importable goods in the consumption basket.[87] It is quite possible therefore, for trade and migration to be in a complementary relationship in this framework, i.e. trade liberalization will be accompanied by increased incentives for migration.
Further extensions of the specific factor framework in more recent years yield similar, indeterminate results with respect to the trade-migration relationship. In the original Heckscher-Ohlin framework discussed above, an increase in the endowment of one factor of production (say, by growth of the labor force) cannot reduce the return to the other factor of production. It turns out that this feature can be central to the ultimate nature of the trade-migration relationship. Extensions of the basic framework to account for factor specialization or specificity, in conjunction with the incorporation of an additional input can alter the result as well. For example, one can hypothesize the existence three inputs, one of which (say, capital) is inter-sectorally mobile, while the other inputs (labor) are sector-specific (for example, in the traded and non-traded sectors). It is also possible to incorporate the assumption that one type of labor (such as highly skilled labor) is mobile across national borders. Models of this type are capable of explaining emigration of skilled labor from developing nations to rich countries following trade liberalization.[88] This phenomenon has received enormous attention in the literature on the “brain drain”.[89]
I turn next to a brief discussion of trade models of more recent vintage and their possible implications for the trade-migration relationship. As mentioned earlier, the more recent literature is characterized by is attention to incorporating non-competitive elements (such as monopolistic competition and increasing returns to scale) into the basic framework.
2: Extensions: Non-Competitive Models:
A basic assumption of the classis trade framework outlined above and its specific factor variants is that of perfect competition and of constant returns to scale in all sectors. Starting in the 1980s, trade economists began to construct models embodying increasing returns to scale and/or monopolistic competition.[90] While a survey of the rich results that may now emerge is beyond the scope of this paper, the following brief observations may be made. First, there are new forces at work in determining the returns to labor and capital (i.e. wages and rental rates) and hence, on the incentives to migrate. More precisely, and unlike the simplest case, both absolute and relative factor endowments matter in determining production costs and hence, comparative advantage. Second, because of intra-industry trade and scale effects, firms tend to locate in areas characterized by large expenditures. In turn, this leads to an agglomeration effect, i.e. there are exploitable gains from cumulatively moving factors of production and production bases to the larger economy. Factor immobility in this context can impede complete agglomeration, and can lead instead to accentuation of differences between countries. Hence, the conclusion is that if country size is allowed to feed into lower costs via increasing returns to scale, then factor mobility can be destabilizing and can lead to concentration of economic activity in one country called the “core”, around which there is a “periphery” of economic satellites.[91] Trade liberalization in such a context is accompanied by increased migration to the core country, i.e. trade and migration flows are complementary in nature. In addition, these labor flows can include outflows of skilled labor from skilled labor scarce areas, i.e. this framework is also fully capable of generating an observed “brain drain”.
In conclusion of this sub-section, it is seen that economic analysis does not unequivocally pin down the direction of the trade-migration relationship. Early competitive models predict that the relationship is of substitutability, but more complex structures can result in trade flows and migration being complements (as they, in fact, were in the nineteenth century). One may conjecture that ceteris paribus, models embodying imperfect competition (characterized, for example by labor market rigidities) may be more applicable to European economies than to the United States US Europe
V: POLITICAL ECONOMY AND PUBLIC CHOICE PERSPECTIVES: I have observed above that while both trade and labor economists have worked extensively on the consequences of expanding trade and immigration respectively, there has been relatively little work in the economics literature that has explicitly examined the trade-migration relationship. To this extent, the previous section was intended to fill a gap in the literature. In the area of political economy (or its more formal cousin, public choice), scholars have attempted to incorporate non-economic factors, such as cultural and interest group preferences or voter choices to explain (or endogenize) immigration policy and trade policy. This is a step beyond that taken by economists, who generally assume that trade policy (for example, the level of tariffs or non-tariff barriers) or immigration policy (for instance, the type and level of entry restrictions imposed) is exogenous and fixed. The work of public choice theorists is a valuable step forward in recognizing the mutual feedback effects that exist between the policy stance and its effects. For example, a given immigration policy (represented perhaps, by numerical quotas or the degree of border enforcement) determines the extent of immigration inflows. However, at the same time, as immigration flows proceed, newly arrived immigrants from coalitions, perhaps along with certain “natives”, and in turn, such interest groups may exert an effect upon future immigration policy. In similar fashion, trade policy as represented by tariff levels or quantitative restrictions, determines the flows of imports and exports. Over time as trade continues, import competing industries in the importing country are adversely affected and often lobby for import restrictions in the form of “safeguard measures” or anti-dumping duties etc.[92] Thus, while free trade may initially enjoy a broad consensus, “too much” success in liberalizing trade erodes the initial consensus with calls for protectionism.
While public choice theorists and political economists have indeed constructed models or frameworks to incorporate such feedback effects, the trade-migration relationship has received very little if any, attention in this strand of the literature, just as with economic analysis discussed in the previous section. For the most part, public choice models that attempt to explain (or endogenize) trade policy or immigration policy have developed separately, with the vast majority of work in this area being devoted to frameworks that discuss and analyze the preferences of states and their constituent voters with respect to immigration policy, rather than trade policy.[93] Implications that such models may have for the trade-migration relationship will therefore have to be independently derived to a large extent, in what follows. I turn now to some of the theses explaining individual and collective decisions regarding migration in political choice frameworks.
As a starting point, it will first be recalled that archetypical economic analyses of international migration is premised upon the existence of a large and attractive differential between expected earnings prospects between the source and source countries.[94] However, an exclusive focus upon expected earnings differentials as the principal driver of international migration is inadequate for the US US US US
A: Non-Economic Factors Bearing Upon Migration: Relative Deprivation: One of the recent, sophisticated attempts to incorporate extra-economic factors in the analysis of international migration at the level of the individual is by Stark and Taylor (1991).[98] Building on early work by Stark in the context of rural-urban migration in an economy internally, Stark and Taylor postulate that the incentives that matter for migration are not so much the disparity in domestic and foreign wages, but an individual or household’s perception of relative deprivation in an appropriate reference group or socio-economic class.[99] In the context of international migration, the relative deprivation hypothesis assumes special importance and can lead to results that are quite different from those that emerge from simpler economic frameworks. As will be recalled from the earlier section, economic models generally assume that international migration of factors (labor and capital) occurs in response to differentials in compensation to inputs. Relative deprivation is defined in terms of one’s standing in a chosen reference group (for example, the local village or community). Households are risk-averse and seek to diversify risks, as well as, improve their lot in the relevant reference group. This could be achieved by permitting or encouraging some, but not all, working family members to emigrate to seek greener pastures elsewhere, while pooling risks by retaining a core base at home.
Moreover, and more interestingly, the reference group is not a static concept. For example, the reference group (with respect to which the relative deprivation is defined), may be the local community or village to start with, but it is quite possible that owing to “demonstration effects”, the reference group may change to encompass communities in the host country, rather than the country of origin.[100] In such a case, relative deprivation increases as migration proceeds, leading to even more migration. Thus, immigration into the host country gathers its own momentum, which may be quite independent of the initial conditions that motivated early migration. In addition, the progressive development and deepening of social and kinship networks adds to this cumulative process.[101]
In the international context, the substitutability of reference groups may be more limited than initially supposed, because international dissimilarities and may be much greater and “mental” migration is much more difficult than across sectors internally in a country. Discontinuities in labor markets and the socio-cultural environment will therefore, temper the role of relative deprivation when considering international migration. This may be especially so, in the case of illegal migration and as some authors have pointed out, the possibility of detection and deportation greatly lowers the rate of return to human capital investment by the illegal entrant. This explains why undocumented aliens remit earnings to the home country in large amounts, and remain at their original skill levels, rather than engaging in formal vocational or other training, even when they are not resource-constrained.[102]
Empirical tests of the relative deprivation hypothesis in the context of Mexican migration to the US Mexico US US US
What implications follow for the trade migration relationship in the context of the relative deprivation framework? These cumulative effects of increased migration feeding upon increased relative deprivation and yet more migration, may be of importance in deducing the relationship of these factors to international trade. It may well be the case that the strength of the migration-relative deprivation effects, which generate self-propelling migration are sufficient to overwhelm the tendency of trade and migration to be substitutes, even in the simplest economic models discussed previously. To my knowledge however, no one has formally demonstrated this proposition to date and this work is to be regarded at present, as unfinished business.
B: Interest Groups: The relative deprivation and relative wage differential hypotheses discussed above, focus on the self-interest of the emigrant decision unit. If emigration appears to be a “winning proposition”, potential migrants uproot themselves and absorb the risks of departure and assimilation in the host country. However, there are winners and losers in the host country as well. On a basic economic level, the proximate losers in the host country are other (usually unskilled or semi-skilled) workers who must now compete with undocumented workers with far lower wage expectations. Liberalized trade with the source country would have initially displaced workers in the import-competing industries in the host country in the same manner. On the other hand, certain sectors in the host country benefit both from legal and illegal immigration, as well as, from trade liberalization. Thus, the exportable industry in the liberalizing country will expand to meet greater world demand and will generally present more favorable wage and employment conditions. Similarly, certain host country employers may stand to benefit from clandestine hiring of low-cost undocumented aliens.
Interest group analysis in public choice theory seeks to identify the self-interests of various groups in society. Because interest groups are free to engage in political lobbying under a democratic franchise, the ultimate immigration and trade policies adopted by the state will be the result of a political contest (or a “repeated game”) between various factions. I turn now to this strand of the literature, especially with regard to immigration policy.
The introduction of interest group considerations to explain the distinctive features of nineteenth century immigration policy in Europe and the Americas
During most of the nineteenth century, European migration into the New World (both North and South America South America Americas North America
Interest groups in such a framework are broadly configured as landowners and owners of labor. Self-interest dictates that factor owners seek to prevent reduction of returns to that input (through demand side considerations or increases in the supply of that input). Therefore, input owners (i.e. owners of capital and labor) generally prefer policies that expand the supply of other inputs, which may be expected to cause a re-distribution of national income to the former. Thus, capital owners would prefer, ceteris paribus, to see an increase in the supply of labor as this raises the relative returns to capital and alters income distribution in favor of capital. A pro-labor state would protect labor income, which in turn would require emigration and/or discouraging immigration of labor with similar skills. On the other hand, a landowner-influenced state would clearly encourage immigration, since this has at least two beneficial effects for the landowner. First, immigration holds down wages of labor which may be required to work on the land. Second, relative scarcity pf land and labor is altered favor of land and to this extent, a larger portion of national income accrues to landowners as rents.
The next key link in the framework is to specify the nature of the policy-maker. Under a truly democratic franchise, national policies with respect to immigrant quotas etc. would be determined by the number of electors that were landowners or labor owners. However, fully democratic franchises were scarce in the nineteenth century, given the limited existence of elected institutions. Most constitutions (to the extent they existed) were effectively controlled by the wealthy, who in that era, were predominantly landed gentry, or by monarchies that had little interest in wage incomes of commoners. Thus, when land ownership and political control are tightly concentrated, an increase in the scarcity of labor relative to land (resulting from expanding frontiers both in North and South America) leads the landowner-controlled government to encourage immigration, either by directly subsidizing immigration, or immigrant travel or by recognizing indenture contracts (such as serfdom and its more odious variations). [108] Treaty obligations or colonial concerns may cause variations in the policies actually adopted. For instance, empire-building might be a strong concern that places a premium on cultural homogeneity and fealty to the colonial monarch, thereby imposing a selection bias on would-be immigrants.[109]
For international migration to take place, accommodating policies must be in place in both the sending and receiving countries. As observed previously, nineteenth century European countries and the Americas Americas Europe Americas
The proposed framework of interest-group coalitions corresponds well in general, with observed immigration policy in the New World Argentina Brazil US US US US US
What are the implications of the interest-group public choice framework for the trade-migration relationship, which is the focus of this paper? Most migration that occurred in the nineteenth century was between Europe and the New World
C: The Median Voter: A framework such as the one described above, with broadly-configured interest groups may be quite suitable to the prototype nineteenth-century government controlled by elite groups. With wider democratic enfranchisement in the first half of the twentieth century, following the end of monarchial rule in several European states, a framework in which the state is more responsive to the average or median voter is desirable.[113] The median voter model is such a construct, and has been applied to determining immigration policy.[114] The starting point is the observation that both immigrants and natives are heterogeneously endowed with labor skills and capital. Natives choose immigration policy by means of majority voting. While cultural and ethnocentric preferences are no doubt important in determining individuals’ voting behavior, the framework focuses solely on economic well-being as measured by income. The framework produces the interesting implication that with majority voting and heterogeneous labor and capital skills, the native population will be polarized between those who favor free skilled labor immigration and those who oppose it.[115] In an economy with a highly-skilled labor force, such as the United States
There are a number of possible extensions of this median voter framework that may be of interest, but have yet to be pursued. First, newly-arrived immigrants tend to specialize both in destination choice and in occupational choice, i.e. they do not compete with native labor in many sectors of the host economy. In fact, field studies conducted by sociologists, anthropologists and other social scientists indicate that such immigrants often concentrate in certain niche sectors of the host economy and in certain occupational and geographical areas, relying on and reinforcing existing social networks. If so, the native voter’s preferences may not be quite as polarized as suggested by the basic framework. Next, natives’ preferences for future immigrants may encompass both over the mix of labor and capital skills of immigrants as well as, over numerical limits (i.e. quotas). Voting on the volume of immigrants, as well as, the skills set of immigrants would require the incorporation of a rationing mechanism. In particular, quotas on future immigrant admissions may be diverse as to family-based and employment based immigration, as is the case in the US
Finally, the framework incorporates only one-shot choices (or referendums). Over time, as immigrants become settled in, many acquire voting rights through naturalization and the nature of the native median voter must be re-defined. This dynamic process of transformation of the median voter over time, through political incorporation in the host state, as well as, socio-economic, linguistic, culinary and cultural assimilation is the life-blood of work on immigration by anthropologists, sociologists and ethnicity/race scholars. Again however, the formal referendum (median voter) model of the public choice scholar has not, to my knowledge, been incorporated in existing work on immigrant assimilation by researchers in other areas.[117]
Simple as this framework may be, it is a useful advance over existing literature in explicitly incorporating voter preferences and in marrying at least two disciplines (i.e. economics and public choice). It also provides the easily verifiable implication that the native population will be sharply divided in its immigration preferences. In fact, some natives may benefit from future illegal immigration of low-skilled labor. The illegality permits selective enforcement of restrictive immigration laws that confine illegal immigrants to employment in sectors where the median voter benefits from the immigrants’ presence. In effect, immigrants are transformed form mobile factors of production who might compete in domestic labor markets with the median voter, to sector-specific factors of production whose presence is beneficial to the median voter. Examples include domestic housework, child care, farm work, work in food processing, the textile industry, elder care (in Israel Japan
D: Can The Median Voter Prefer Selective Illegal Immigration? The incorporation of officially tolerated illegal immigration, in conjunction with legal immigration in a formal framework has been a fruitful line of research that has been recently pursued.[120] While illegal workers can be implicitly accommodated in the simple median voter framework described above, more recent analysis explicitly allows for the existence of illegally present labor along with legally resident labor. The latter are in the majority and are assumed to be mobile across sectors (as is capital). On the other hand, selective enforcement of immigration laws ensures that illegal workers can be confined to certain sectors and are therefore, occupationally immobile.[121] The analysis demonstrates that the attitude of the median voter (who represents the legal majority) depends upon initial conditions. If no (or very few) undocumented aliens are initially present, the median voter opposes all immigration, legal or not. However, when undocumented aliens are already present, voters may hypothetically elect between various alternatives; for example (a) An amnesty for current illegal workers with no further immigration of any type (b) Permit illegal aliens to remain without an amnesty (i.e. permissible illegal immigration) and a ban on all future immigration (c) Mass expulsion of all currently present illegal workers and (d) Permit illegal workers to remain without an amnesty and permit still more illegal immigration through imperfect border and interior enforcement. It turns out that the policy choice that commands majority support in any pair-wise referendum is the last one, permitting illegal workers to remain in the host country without legalization and furthermore, permitting additional limited illegal immigration.
Upon reflection, it should be clear that this outcome of a hypothetical referendum vote is not without intuitive basis. If illegal workers can be confined to certain sectors of the economy in which they do not compete with resident labor, the effect upon the latter’s wages will be small. At the same time, the work performed by illegal immigrants is complementary to that of legal workers. Voters still prefer to retain illegal immigrants in a state of unamestied limbo, in order to assure confinement to desired sectors upon pain of apprehension and possible deportation. The fact that illegal workers may be found in large numbers particularly in service sectors in several countries, i.e. sectors that produce non-traded goods, can also be rationalized. Most illegal immigrants have low incomes and their propensity to consume services such as restaurant services, cleaning services on their own is limited, if not non-existent. When illegal workers proliferate in the non-traded goods sector and add to output in that sector without consuming any of the latter’s output, relative prices of non-traded goods fall, benefiting enfranchised legal voters. Finally, even guest-worker (Gastarbeiter) or temporary specialized workers can be comfortably accommodated in such a framework. While guest workers are lawfully present, they are usually confined to certain occupations and sectors under the terms of their temporary visas.[122]
F: Can Public Choice or Game Theoretic Considerations Explain Immigration Quotas?: In previous sections of this paper, I have referred, at several points, to the existence of statutory immigration quotas for lawful immigrants. But what determines the quota limits set by legislatures? The current US
Participants in the contest naturally comprise coalitions of interest groups with potentially competing views, as for example, firms and labor unions. One simple approach is to focus on immigrant quotas in the context of an all-pay (winner-take-all) contest between these interest groups.[125] The participant with the highest expenditures on the lobbying contest wins the game as to the ultimate quota amount. Because neither party is aware ex ante, of the other’s likely expenditure on the contest and expenditures must be pre-committed, players must choose their pay strategies without knowledge of the opponent’s counter-strategy. The game is solved backwards in two stages, as is standard in such models. First, the union and the firm bargain over the optimal immigration quota. Once this amount is known, the political lobbying sub-game is solved in the second stage. The framework does produce some interesting results. For example, the larger the labor union size, the smaller is the expected immigration quota. It would straightforward and of interest to empirically test this proposition, but as yet, there has been no such attempt. Two other results are of interest. First, immigration quotas are correlated with the stage of the business cycle in that during boom times, such quotas will increase.[126] Second, during periods of relative economic slumps in sending countries, the asking wage (“reservation wage”) of immigrants decline, leading to an increase in expected immigration quotas. It should be noted however, that this framework is static; over time, immigrants may join labor unions or form coalitions with firms. Extensions along these lines have yet to be pursued.
But, what of trade in good and services and its relationship with the many aspects of migration discussed above? As with interest group analysis, the median voter framework and its game-theoretic extensions discussed in this section have not been extended to explicitly incorporate trade in goods and services.[127] Nevertheless, a few general observations are possible. Unlike immigration, which can be described as discrete and “lumpy”, trade flows are continuous in nature. In the context of the simple competitive models discussed earlier, free trade leads to a convergence in factor prices. Thus, the disparity between wage rates of native and immigrant labor tends to become eroded, as discussed earlier. In turn, this has implications for the preferences of native labor and for the results of the “referendum” vote on future immigration. In particular, as wage and rental rates across natives and prospective immigrants converge, voters become less polarized with respect to their preferences regarding immigration policy. In turn, this implies that the engine that drives immigration policy (i.e. diverse voter preferences) must slow down. In this sense, trade flows may eliminate or reduce the alternative basis for immigration that is based upon preferences of natives, i.e., over time, “substitution effects” between trade and immigration policy once again begin to emerge. It should be noted however, that this inference is limited to the basic trade model discussed previously.
The implications of marrying endogenous immigration preferences relating to amnesties, permissible illegality or quotas with more complex models of trade, such as those incorporating either strategic trade or monopolistic competition are at present, as entirely uncharted territory.
VI: OTHER APPROACHES: SOCIOLOGY, INTERNATIONAL POLITICAL ECONOMY AND INTERNATIONAL RELATIONS: In this Section, I draw upon some of the literature in sociology, anthropology, demography, international political economy and in international relations with regard to migration and trade. Until very recently, and for the most part, the work of sociologists, demographers, international relations theorists and economists has seen very little inter-disciplinary pollination to any significant degree.[128] This status quo may be changing however, at least as far as migration studies are concerned, as a new generation of scholars who were once themselves former immigrants, has emerged.
A: Areas Commonly Examined in Various Disciplines the Possibilities: Traditionally, sociologists working in the area of migration have focused on assimilation of foreigners into host society and related issues of segregation and marginalization.[129] Anthropologists have examined the retained links and networks between immigrants and their countries of origin. These links have been strengthened by the recent nationality reforms permitting dual citizenship with the US Mexico Dominican Republic
It is apparent that the various bodies of work referred to above, are capable of fruitful cross-fertilization and to a limited extent, this has begun to occur in very recent work. For instance, the work on social, linguistic and cultural assimilation of sociologists can be related both to economic assimilation and to the broader concept of political membership and participation as examined by political scientists. Similarly, one of the contingencies of historical development can be discord and disharmony sown by perceived unequal opportunities for political participation.[131] On an even wider level, political incorporation of immigrants may ultimately confer rights that span traditional national borders and thus, create the groundwork for studies in international relations. Social networks studied by anthropologists have an obvious effect upon both the actual and perceived costs of migration and to this extent, can easily be incorporated into the quantitative and qualitative work of economists who focus on the costs and rewards to international migration. Analyses of spatial segregation of immigrant communities, i.e. the usual domain of urban studies scholars, can also inform sociologists’ work on community integration and assimilation. Finally, emerging work of scholars in ethnic studies on “whiteness” is itself related to barriers to assimilation.[132]
B: Examples of Possible Syntheses: In Section V, I have examined political economy and public choice frameworks in some detail. As indicated above, the concepts of interest groups and the median voter are intimately related to issues of political membership and incorporation into host society. Thus, the models discussed in that Section combine public choice concepts with formal methods in economic theory. In what follows, I describe an alternative form of synthesis using acculturation and locational theory as an example.
Immigration (other than purely mental migration or anticipatory acculturation) necessarily involves locational re-settlement along with appropriate acculturation. Thus, one useful approach is to start by examining locational frameworks in areas in which they were first developed. Locational preferences of individuals (due, either to cultural or economic reasons) were initially formally modeled in Tiebout-type locational choice models in regional economics.[133] Scholars in other disciplines, such as sociology, demography etc. have added content to locational preferences by observing that cultural preferences, in turn, may originate in social networks or in safety nets.[134] In Tiebout’s original framework, jurisdictions are able to exclude outsiders from free access to collectively provided goods, thus mimicking “rivalrous” consumption and excludability which are essential characteristics of private markets.[135] In the context of international migration, the “charge” for access to a jurisdiction may be stylized as the implicit fee for belonging to a social network. The implicit fee is often a social bond, embodying reciprocal obligations of trust, loyalty and mutual support. Because of these network effects, people with similar cultural preferences tend to congregate together.[136] Thus, when culture is a locationally-provided public good, one is likely to observe agglomeration effects similar to the effects in core-periphery models of trade, as discussed above. Even the most cursory examination of data reveals this to be the case for international migrants, regardless of their countries of origin or destination.[137] Cultural preferences have also been embedded in national immigration policies, for example, in the “White Australia United States
Cultural preferences of prospective migrants may often be supplemented with other selection criteria, imposed by either the host or source country or both. For example, “brain drain” models mentioned earlier have described how differentiated populations in poorer countries are subject to varying emigration incentives often set by the receiving country.[139] It is also possible to conceive of strategic self-selection criteria, imposed by the prospective immigrants themselves; for example, family pressure upon individuals migrating abroad to maintain sizable remittances to those remaining at home can be viewed as a selection device to keep low-skilled workers from emigrating.
With respect to the trade migration relationship, researchers at present have not formally combined Tiebout-type locational choice or cultural preference models with trade models of the type discussed in earlier sections. One might conjecture however, that that if cultural or locational preferences regarding migration are largely independent of economic considerations, locational choice would likely weaken the substitutability relation between trade and migration, if it exists, or in the alternative, strengthen a relationship of complementarity. On the other hand, positive economic factors may tend to reinforce locational choice, and to this extent, the latter would tend to compound the relationships between trade and migration that are established in trade models alone. Thus, the implications of embedding locational choice or cultural preferences in trade models would seem to depend upon whether locational or cultural choices are affected positively by the same economic considerations (namely, disparities in expected wages or rewards across source and recipient countries) that affect trade in goods and services.
Scholarship on migration in the disciplines of international political economy and international relations is relatively recent, dating perhaps to the 1980s.[140] Furthermore, integration of migration and trade in these disciplines is, as yet, not developed.[141] Nevertheless, international political economy and international relations theory do offer a perspective on migration that is distinct from that in economics or in public choice.
Creation of interest groups is also an ingredient of international relations analyses as it is in public choice framewoks. The creation of coalitions that are large enough may affect national identity and the very definition of the sovereign state itself.[142] With the development of social, kinship, informational and institutional networks, transnational communities emerge that render the once clear physical boundaries of the nation-state increasingly irrelevant. From the emergence of transnational communities, it is a short step to the creation of rights of transnational citizenship. While many of these rights are usually created by independent judiciaries in the relevant receiving state, creation of interest groups with powerful political connections may also play a key role.[143] As a consequence, the capacity of liberal democracies to control migration is eroded.[144] [145]International relations scholars emphasize that coalition building or interest group creation is influenced by three considerations; ideational/cultural factors, economic interests (which are linked to factor rewards) and by common transnational rights which evolve in liberal democracies. In this sense, and as noted previously, international relations theory proposes a broader framework of analysis than either economics or public choice.
Despite the existence of the rapidly growing body of work on migration employing methods and concepts from international relations or international political economy, there is at present, no general, formal analysis of international trade in these disciplines. What analysis there is of trade in the context of transnational networks, has largely focused on the emergence of regional mega-centers or “global cities” such as New York London Paris Los Angeles
VII: EMPIRICAL REGULARITIES AND EVIDENCE: Section III above reviewed empirical data on historical trends in trade, labor and migration flows over a number of years. Somewhat surprisingly, there have been hardly any rigorous tests of the substitutability or complementarity relationship between trade and factor flows, in particular between trade flows and migration. An exception is the work by the economic historian Jeffrey Williamson and his colleagues, and in this section, I draw upon some their work.[147]
Conceptually, the relationship between trade and migration can be addressed in one of two alternative ways. First, considering an initial position of little or no trade in goods and services, what is the effect of trade liberalization upon incentives to migrate? As indicated in Section IV above, in the simplest type of trade models, the answer is unambiguous. Trade liberalization leads to a decline in incentives to migrate, implying that trade and migration are substitutes. However, the issue may be phrased alternatively as well. Given an initial position of factor immobility (accomplished by effective restrictions on labor and capital movements), what is the effect of permitting free factor mobility (such as for example, within the European Union), upon trade in goods and services? In the context of the basic trade models discussed in Section IV, the same answer emerges, namely, increased capital and labor mobility equalizes capital-labor ratios across countries and eliminates the basis for trade. Once again, migration (and capital movements) is a substitute for trade in goods and services.
These classical results are subject to change when any of the simplifying assumptions of the basic framework are altered. Thus, if the basis for trade is something other than differential factor endowments, if there are increasing returns to scale, specific or inputs (other than labor and capital), imperfections in goods or factor markets, then the predicted relationship between trade and migration is ambiguous and highly model-dependent. These complexities were discussed in Section IV above. However, in a very stylized framework, the presence of an additional input, say, land, can be shown to lead to trade-factor flow complementarity, particularly, if the additional input is subject to natural increase. If land is the additional input, the land frontier may be subject to expansion; Such an assumption is particularly realistic for the New World, certainly until the end of the nineteenth century in the western United States and for a few years later in the rest of the New World.
Interestingly, the concept of an endogenous land frontier lends itself to application in the context of today’s Third World Third World
(A): Time Series Tests: Collins et al have performed simple time series regression tests over the period 1870-1936 (truncated into two time periods, in order to exclude the inter-war years 1914-1918). By the late 1930s, the looming clouds of the Second World War had disrupted normal trade patterns so that the period after the 1930s is excluded as well.
The basic estimating equation regresses real absolute trade flows (defined as the deflated sum of exports plus imports) on a variety of explanatory variables including, gross migration flows, net capital flows (measured by the absolute amount of the current account imbalance), time trend variables, deflated tariff revenue and a transport cost variable. Symbolically, the regression equation is:
Real Trade Flows = α + β1 MIG + β2 CAP + β3 TR + β4 TF + t + ε
Where MIG is gross migration, CAP is the net deflated absolute current account, TR is a measure of tariff revenue, TF is an index of transport costs and t a time trend variable.
Aside from possible misspecification and the presence of non-stationarity in the long-term time series, a more serious shortcoming of the estimating equation is the fact that the key dependent variables are not independent of each other.[149] For example, labor and capital flows are not expected to be unrelated to each other.[150] As a consequence of such inter-dependence, estimated values for the coefficients in the above regression relationship are likely to be biased. Nevertheless, estimation of the equation may be useful in providing at least some insight into the trade-migration relationship.
The results of the time series analysis for the US Canada Australia United Kingdom Old World New World
(B): Cross-Section Panel Data Tests: Pooled cross-section data tests over the period 1870-1940 have also been performed.[151] The estimating equation now is:
(Trade/GDP) = α + γ1NETMIG + γ2(CA/GDP) + γ3TR + γ4 TF + Scale Variables + ε
Where tariff and transport cost variables are defined as earlier and NETMIG is a measure of net migration, while (CA/GDP) is the current account to GDP ratio for each decade in the time period. Similarly, trade flows are deflated by GDP in order to account for country size variations. One would expect the same concerns about dependence between migration flows and capital flows as mentioned earlier (i.e. the presence of “multicollinearity”); however, and as indicated above, lacking suitable instrumental variables the equation is estimated, correcting for serial correlation, over each decade separately.
The empirical results yield a statistically significant negative estimate for the tariff variable, as expected. Higher tariffs are expected to inhibit trade flows. However, the key relationship of interest here – the relationship between trade and factor flows – exhibits an empirically weak association. Once again, there is little or no empirical support (in these tests) for the substitutability hypothesis between trade and migration, and if anything, there may be some evidence of mild complementarity between trade and capital flows.
These results demonstrate to a limited extent, that accounting only for economic factors, trade flows and migration flows do not appear to be empirically related over historical periods. As will be recalled, simple economic frameworks generate the strong prediction that trade and migration flows are expected to be substitutes. For present purposes, these results may be taken to indicate both that more empirical testing is necessary and that economic factors alone are insufficient to explain the complex set of relationships between trade and factor flows.
C: Empirical Results From The Political Economy of Immigration: In previous sections, I have offered perspectives on the trade-migration relationship drawn from several other disciplines, such as public choice, anthropology, sociology, international relations etc. At the time of this writing there has been virtually no attempt to analytically combine approaches from different disciplines in a comprehensive empirically testable framework. There is however, a body of empirical literature on the political economy of immigration which combines two disciplines, namely, political choice and economics. Examples include work by economic historians Timmer and Williamson. These authors investigate whether over long historical periods, policy-makers and legislators behaved as though they believed that trade and migration were substitutes.[152] In other words, this work attempts to construct an index of restrictiveness of immigration policy and then relates it to proxy measures of the stance of trade policy, in addition to certain other variables that may seem relevant to explaining the immigration stance of a particular nation from a sociological or politico-economic viewpoint.
Recall first that the closing of the open land frontiers in the New World
While the experiences of various New World US Argentina Canada
In general, immigration of low-skilled labor from the Old World into the New World would be expected to increase income inequality in the rich New World New World New World
In order to test for the influence of various economics and other variables, including trade policy and immigration policies, a summary measure of the stance of immigration policy must first be constructed. The index used by Timmer and Williamson ranges from -0.5 (very anti-immigration) to 0.5 (very liberal). The immigration policy variable is then regressed on variables intended to capture both economic and other factors, over the period 1860-1930 in the New World New World
VIII: CONCLUSION: This paper has examined the relationship between international trade and international migration from a variety of perspectives. Although, there has been a prodigious amount of scholarship in various disciplines in both of these areas, there has been very little effort to synthesize them, either within a particular discipline or across disciplines. A specific issue of focus has been the effect of trade liberalization upon incentives to migrate, and conversely, the effect of liberal international migration upon patterns and extent of international trade. Such a query is of immediate relevance to policy-makers to ensure consistency and coordination across various policies adopted by law-makers. Unless the inter-relationship between trade and migration was both well-defined and known, it is quite possible for a policy adopted with regard to say, international trade, to undermine the results desired from the extant immigration policy.
History itself offers examples of diverse policies pursued across countries and over time. For example, the European Union chose to pursue both trade liberalization and free mobility of labor (along with other “freedoms”) simultaneously during the formation of the Community. On the other hand, the United States Canada Mexico United States
Scholars in various disciplines have had varying levels of interest in trade and migration and have applied methods of varying degrees of rigor in analyzing trade and migration. For example, the work of sociologists, anthropologists and demographers has been principally concerned with issues related to migration, such as acculturation and assimilation of outsiders within a host country, rather than international trade in goods and services. In the past, methods used in these disciplines have primarily utilized case or cohort field studies of sample groups of individuals. More recently however, a newer generation of researchers in these disciplines, have begun to turn to utilize the formal techniques of empirical economists to study assimilation and incorporation of aliens and related issues.
Political and socio-economic incorporation of aliens has also been of interest to international relations theorists and to political scientists. Political and economic incorporation of aliens along with unimpeded transnational migration has implications for the very definition of the sovereign state and international relations scholars have concerned themselves with the possible loss of sovereignty in the face of such migration and the acquisition of rights of transnational citizenship by immigrants and others. Political scientists and public choice theorists have similarly dealt with incorporation of aliens through lobbying and ultimate political enfranchisement. Over time, the profile of the representative voter in representative democracies undergoes change and the preferred immigration policy itself evolves.
It is of interest to observe that the disciplines mentioned above have principally dealt with various facets of the causes and consequences of migration and immigration policy. i.e., issues relating to international trade and trade policy are conspicuously absent in most of this literature. To the extent possible, I have attempted to offer reasonable conjectures of the possible policy implications that might emerge when the existence of both trade and migration is embedded in frameworks proposed in political science, sociology or international relations.
In contrast to the latter disciplines, scholarship in economics has a long history of using formal analytical and empirical methods in examining trade and migration. For the most part however, economic researchers working in these areas have proceeded along different lines and have remained within their sub-fields. Trade theorists have generally been concerned with explaining patterns and consequences of trade, with peripheral attention to migration. Migration has been studied by labor economists, whose dominant focus has been the effort of migration upon host country wage and skill levels, and the impact upon fiscal finances in the latter country. However, just as immigration of workers with a particular skills set and lower wage demands is apt to displace native workers with similar skills, so too with imports of goods from low wage countries. Indeed, on this basic level, importing goods or importing workers who produce those goods, result in similar painful and disruptive consequences for certain workers in the importing country. At least as far as immediate economic impacts are concerned, there is an intimate relation between trade in goods and migration of persons.
However, even within this field, more complex and realistic structures can undermine this intimate relationship. And, if effects other than immediate short-term economic impacts are considered, it is clear, even to the casual observer that trade with low wage countries is vastly different than importing low wage workers from these same countries. Unlike importation of goods, migration of persons has wide-ranging implications for cultural, linguistic, spatial and socio-political assimilation and incorporation.
A satisfactory analysis of the relationship between trade and migration with attention to economic and socio-cultural aspects of the relationship requires the integration and synthesis of work from several disciplines. At present, such a comprehensive framework does not exist.[154] In time, one would expect more significant cross-fertilization and discourse across disciplines, and the possible emergence of a more comprehensive framework that may be capable of empirical validation. In the present paper, I have endeavored to provide an outline of a blueprint for such a synthetic framework.
* Ph.D., LL.M., J.D., M.S., Professor of Law, Florida
[1] Some of the few exceptions that exist are cited at appropriate points below.
[2] The theoretical underpinnings in economics pertaining to this issue will be discussed in further detail below, for the benefit of the non-specialist reader. At this stage, it should be pointed out that readers who are sophisticated in international economics may find some of the discussion and explanations to be unnecessary or even over-simplified. For this, I apologize in advance; however, as indicated above, the intended readership for this paper covers a broad range of professionals in various disciplines. The genesis of the modern theory of international trade is commonly attributed to a paper published in Swedish by Eli Heckscher in 1919 and then translated into English some thirty years later. The original work was extended and refined and explicated by Heckscher’s student Bertil Ohlin, who was the recipient of the Nobel Prize in economics in 1977. Further refinements to the basic Heckscher-Ohlin framework was carried out by T.M. Rybczynski in 1955, Ronald Jones in 1965 and Paul Samuelson, often considered the wunderkind of the Harvard Ph.D. generation of the 1930s. The basic original references are as follows: Eli Heckscher, The Effect of Foreign Trade on the Distribution of Income, in Ekonomisk Tidskrift 497-512 (1919) (in Swedish); Bertil Ohlin, Interregional and International Trade (Harv. Univ. Press 1933); T.M. Rybczynski, Factor Endowments and Relative Prices, 22 Economica 336 (1955); Wolfgang Stopler & Paul A. Samuelson, Protection and Real Wages, 9 Rev. Econ. Stud. 58 (1941); Ronald Jones, The Structure of Simple General Equilbrium Models, 73 J. Pol. Econ. 557 (1965). As the title implies, Heckscher was concerned with the effect of international trade almost a hundred years ago, upon the distribution of income. At that time, the Old World (including Sweden United States
[3] The Canada–United States Free Trade Agreement, Dec. 22, 1987-Jan. 2, 1988, 27 I.L.M. 281 (1989) entered into force on January 1, 1989, while the trilateral accord that included Mexico, i.e. the Canada-Mexico-United States: North American Free Trade Agreement, Dec. 8-17, 1992, 32 I.L.M. 289 (1993) entered into force on January 1, 1994. Both accords are Congressional-Executive agreements and their treaty status, in particular that of NAFTA, under ART. 2 of the US
[4] See e.g., James F. Smith, NAFTA and Human Rights: A Necessary Linkage, 27 U.C. Davis Seattle
[5] Chapter 16 of the NAFTA accord (entitled “Temporary Entry for Business Persons” contains a number of relatively minor changes to US immigration provisions, principally concerning easing of restrictions on certain classes of non-immigrant visa applicants, such as business visitors, treaty traders, intra-company transferees and skilled professionals. Chapter 12 of the Agreement clearly states that the accord imposes no general obligations regarding immigration or access to employment upon the state signatories. For a discussion of the labor provisions of NAFTA, see for example, Noemi Gal-Or, Labor Mobility Under NAFTA: Regulatory Policy Spearheading the Social Supplemental to the International Trade Regime, 15 Ariz. J. Int’l & Comp. L. 365 (1996) (suggesting that NAFTA simply provides a strategic super-structure waiting for the addition of labor provisions).
[6] This included former Presidents Ford, Carter and Bush, each of whom endorsed the NAFTA and observed that NAFTA would serve to limit illegal immigration into the US Mexico
[7] Illegal immigration from Canada United States US US US
[8] The hypothesis that trade and labor mobility are substitutes (in their impact upon factor prices such as wage and rates of return on capital) is a direct implication of the simplest trade models discussed in Section IV below. More specifically stated, free trade in goods and services will tend to equalize wage rates and returns to capital (rental rates) across trading partners in the same manner as would cross-national migration of persons (or capital) from a labor(capital)-abundant country to one in which labor (capital) is scarce. It is in this sense, that trade and migration may be substitutes (or equivalent). The proposition regarding wage and rental rates referred to above is known in the international trade literature as “factor price equalization”. A corollary proposition is that protectionism in a country benefits the relatively scarce factor input, and in converse, free trade would tend to lower the returns to the scarce factor. Originally stated and proved by Stopler & Samuelson, supra note 2, this result follows from the basic Heckscher-Ohlin framework mentioned in note 2 (which is further discussed in Section IV). Additional details on factor price equalization and the effect of protectionism on real wages can be found in basic texts such as Krugman and Obstfeld or Caves, Frankel and Jones. See Krugman & Obstfeld, supra note 2; Caves, Frankel & Jones, supra note 2. The policy implications of the work by Stolper and Samuelson can be readily reconciled with the policy stance adopted by various groups and coalitions in the US Mexico US US US Americas
[9] In fact, the entire debate over immigration in the US US US US US Id.
[10] This is not to say that informed writers and officials were unaware of the interdependence between trade and labor flows in general. See, e.g., Johnson, supra note 6. See also Gene McNary, Moving Goods and People in International Commerce, 2 Duke J. Comp. & Int’l L. 247, 247 (1992) (speech delivered February 6, 1992 at Duke University) (transcript) (“I feel more than a bit confident in acknowledging that if immigration is not formally on the table, someone at the table will sooner or later realize as a practical matter, that moving goods and services in international commerce involves moving people who trade in these goods and services”) (remarks of the Honorable Gene McNary, US Commissioner for the INS).
[11] A few economists and some public figures opposed the NAFTA. See, e.g. Raveendra Batra, The Myth of Free Trade: The Pooring of America St. Martin
[12] The “optimality” of free trade for a small country unable to affect its terms of trade (roughly, world prices for its exportables and importables), under relatively restrictive assumptions of perfect competition, full information, etc., is an elementary proposition in international trade. At bottom, the increase in economy wide (and worldwide) welfare with free trade in goods is traceable to the gains from specialization in the production of goods in which countries have varying comparative advantages. See, e.g., Krugman & Obstfeld, supra note 2. However, a number of very well-respected economists have expressed reservations about the wisdom of pursuing plurilateral free trade agreements (such as the NAFTA) over multinational accords such as the WTO. See, e.g. Jagdish Bhagwati, The World Trading System at Risk (Princeton Univ. Press 1991).
[13] Even a semblance of a comprehensive list of references in this area is likely to occupy an article length manuscript. A seminal contribution in this area is a set of studies published under the auspices of the National Research Council (NRC). The New Americans: Economic, Demographic and Fiscal Effects of Immigration (James Smith & Barry Edmonston, eds., Nat’l Academies Press 1997); The Immigration Debate: Studies on the Economic, Demographic and Fiscal Effects of Immigration (James Smith & Barry Edmonston eds., Nat’l Academies Press 1998). In addition, the work of Professor George Borjas in this area is universally cited and respected. Indispensable reading in this field includes George Borjas, Heaven’s Door: Immigration Policy and the American Economy ( Princeton Univ.
[14] In fact, several States (for example, New Jersey, Florida and Texas) filed suit against the United States for failing to prevent illegal immigration and seeking to recover funds expended for educating children of illegal aliens (as required by federal law) and associated expenses. Not surprisingly, none of the lawsuits resulted in any judicial relief for the States. See, e.g. Texas United States Chiles United States Fla. New Jersey United States
[15] The “brain drain” refers to the migration of skilled workers from developing countries to the advanced Western economies such as the United States US Australia Canada United Kingdom US
[16] In the economic literature, methods that focus on one market or sector of the economy alone are termed “partial equilibrium” methods. By contrast, “general equilibrium” methods account for the interactions and interdependence between different markets and sectors in the economy. The cost of the increased complexity is that frequently, such general models cannot be analytically solved, and the researcher may have to resort to numerical simulation of the model in order to understand their properties. A few studies have employed such Computable General Equilibrium (CGE) models. See, e.g. R. Faini, J-M. Grether & J. De Melo, Globalization and Migratory Pressures from Developing Countries, in Migration (R. Faini, J. De Melo & K. Zimmerman, eds., Cambridge Univ. Press 1999).
[17] For the most part, many of these disciplines have contributed to understanding migration and societal assimilation of newcomers. Hence, demographers or anthropologists have had little occasion to study international trade and have dealt mainly with migration. By contrast, political scientists and international relations theorists have examined both migration and trade, albeit separately. The interested reader is referred to the following sources for a sampling of work in these disciplines: In sociology, Frank Bean & Gillian Stevens, America’s Newcomers and the Dynamics of Diversity (Russell Sage 2003), Saskia Saasen, Guests and Aliens (New Press 2000); Richard Alba & Victor Nee, Remaking the American Mainstream: Assimilation and Contemporary Immigration (Harvard Univ. Press 2005); in political science and political economy, I.M. Destler, American Trade Politics (4th ed., Inst. for Int’l Econ. 2005), Wayne Cornelius, Takeyuki Tsuda, Philip Martin & James Hollifield, Controlling Immigration: A Global Perspective (Stanford Univ. Press 2004); in international relations and political economy, Tomas Hammar, Grete Brochmann & Kristof Tamas, International Migration: Multidisciplinary Perspectives (Berg Press 1997) and in anthropology and social demography, Caroline Brettell, Anthropology and Migration; Essays on Transnationalism, Ethnicity and Identity (Altamira Press 2003) and Lillian Trager, Migration and Economy: Global and Local Dynamics (Altamira Press 2005) among others.
[18] See generally Migration, supra note 16. Additional work is cited in Section V below.
[19] The simplest trade models of Heckscher-Ohlin vintage assume that inputs in production (labor and capital) are perfectly mobile across various domestic industries, but that the same factors are internationally immobile (i.e. they are country-specific). See supra note 2 and accompanying text.
[20] Similar considerations likely explain the de-coupling of the current debate on immigration (which primarily deals with illegal immigration and the need to prevent entry of foreign terrorists) from the policy debates regarding pending trade agreements such as the FTAA and the just completed DR-CAFTA.
[21] The NAFTA accord deals with environmental protection in Ch. Ch.
[22] I consider this ironic in that social scientists had long studied trade and migration, and had for some time, attempted to quantify the impact of immigration, upon host and receiving countries. As indicated in note 2, the essentials of the work in international trade by Eli Heckscher were well-known to the English-speaking world by the 1930s and certainly by the 1940s. In fact, large-scale empirical testing of this framework had already been conducted in the well-publicized work of another Nobel Laureate, Wassily Leontief by 1953. Wassily Leontief, Domestic Production and Foreign Trade: The American Capital Position Re-examined, 67 Proc. Am. Phil. Soc’y 332 (1953). Legal scholars on the other hand, had no such empirical experience to draw upon, but only the historical experience of the European Union and other regional blocs.
[23] See, e.g., Alan C. Nelson, NAFTA: Immigration Issues Must Be Addressed, 27 U.C. Davis
[24] Johnson, supra note 6, does not endorse an anti-trade restrictionist position, but would have preferred to see migration provisions (modeled after the European Union Treaty) to have been included in the NAFTA; Id at 943.
[25] See, e.g., Dolores Acevedo & Thomas Espenshade, Implications of a North America Free Trade Agreement for Mexican Migration into the United States, 18 Population & Dev. Rev. 729, 730-31 (1992) (observing, “[i]n absence of protectionism, trade among countries with different factor endowments is a substitute for migration. In other words, if countries with an abundance of labor can specialize in the production of labor-intensive goods, there need not be labor migration to more developed countries”) (cited also in Johnson, supra note 6).
[26] United States Commission for the Study of International Migration and Cooperative Economic Development, Unauthorized Migration: An Economic Development Response xvi (1990) (report of bipartisan commission created by Congress under the Immigration Reform and Control Act of 1986 (“IRCA”)).
[27] Id.
[28] However, economists assessing the impact of NAFTA on the US economy appear to have generally concluded, that enactment of NAFTA would only marginally increase illegal immigration into the US, and that too on a temporary basis. See, e.g., Gary C. Hufbauer & Jeffrey J. Schott, NAFTA: An Assessment (Inst. for Int’l Econ. revised ed. 1993). Policy-makers, on the other hand, apparently viewed trade liberalization and immigration as being complementary. As discussed below, while the US
[29] See League of United Latin American Citizens v. Wilson
[30] At the same time, the budget of the US
[31] At the risk of belaboring the point, it may be noted again that if trade and immigration policies were viewed as substitutes, trade liberalization alone would have been sufficient. In other words, trade liberalization, by itself, would have reduced the incentives for migration; there would be no need to enact separate immigration-restricting legislation.
[32] Immigration and Reform Control Act of 1986, Pub. L. No. 99-603, 100 Stat. 3359 (1986).
[33] The actual ultimate inflow is a combination of both the demand for such persons by US employers and of the supply of workers willing to re-locate illegally to the US
[34] See, e.g., Peter Brimlow, Alien Nation (Harper Perennial 1996). Brimlow reports that by 1989, the INS had put some 390,000 SAW (Special Agricultural Workers) amnesty applications “on hold,” for suspected fraud and had arrested 750 individuals for selling phony labor documents.
[35] The actual number of immigrants admitted in fact, exceeds the quota amount, because a number of immigrants (such as “immediate relatives” of US citizens) are exempt from the quota.
[36] For a summary of the main provisions of IMMACT90, see Miguel Lawson & Marianne Lin, The Immigration Act of 1990, P.L 101-649, 33 Harv. Int’l L. J. 255 (1992).
[37] Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. No. 104-132, 110 Stat. 1214 (1996).
[38] See Office of Immigration Statistics, Department of Homeland Security, 2003 Yearbook of Immigration Statistics, Table 43 (2004); Estimates of the Unauthorized Immigrant Population Residing in the US 1990-2000, supra note 9, at Chart 2.
[39] Illegal Immigration and Immigrant Responsibility Act of 1996, Pub. L. No. 104-208b, 110 Stat. 3009 (1996).
[40] Uniting and Strengthening America
[41] Also pending are some nine bills containing amnesty provisions for aliens unlawfully present in the US
[42] It should be observed that various provisions in the NAFTA accord with Mexico
[43] These “four freedoms” form the “pillars” of the European integration. See Treaty Establishing the European Community, Feb. 7, 1992, 1 C.M.L.R. 573 (incorporating changes made by the Treaty on European Union, Feb. 7, 1992, O.J.C. 224/1, 1 C.M.L.R. 719, 31 I.L.M. 247). The Treaty on European Union, in turn, amended the Treaty Establishing the European Economic Community, Mar. 25, 1957, 298 U.N.T.S. 11 (the original instrument for European integration) as amended by the Single European Act, O.J.L. 169/1 (1987), 2 C.M.L.R. 741). The facilitation of free movement of persons within the European Union and the elimination of border checks for persons already admitted to one member state was sought to be addressed in the Schengen Accords. See Schengen Agreement on the Gradual Abolition of Checks at Their Common Borders and the Convention applying the Agreement, Jan. 1991, 30 I.L.M. 68, 69, 73, 84 (in four parts). The Schengen Agreement was concluded in January 1985 and merely obligated the state parties to draw up proposals on the removal of their common frontiers. The Schengen Accords were later modified by the Treaty of Amsterdam Amending the Treaty on European Union, Oct. 2, 1997, O.J. (C340) 1 (1997).
[44] For readers not particularly conversant with finance and economics, the terms current account and capital account may be described as follows: The current account and capital account of a country together comprise the balance of payments. The latter is a systematic record of a country’s economic transactions with the rest of the world (or with other countries singly, in which case it is known as the bilateral balance of payments) over a period of time (such as a quarter or a year). Many inter-relationships between countries are not accounted for in the balance of payments; for example, emigration and immigration of persons are not recorded. However, inflows and outflows of capital movements are recorded in the capital account. Capital movements can either involve foreign direct investment (FDI) (such as acquisition of physical capital assets abroad) or portfolio investment (which represents sales or purchases across countries of financial assets, such as bonds or equities). The current account is composed primarily of the trade balance and the service account. Of these, the trade account is more commonly known to non-specialists; it records the values of imports and exports of goods and services of a particular country. The service account records payments and receipts of interest (for example on previous capital transactions), dividends, royalties, patent, franchise, license fees, etc. For additional details, the interested reader may consult a source such as The New Palgrave: A Dictionary of Economics, supra note 2; Krugman & Obstfeld, supra note 2.
[45] There is very considerable literature (both in development economics and in law and development) on the “sequencing” of reforms, with most mainstream economists (and legal policy makers) recommending trade or current account liberalization first, followed by domestic financial reform (including the domestic banking system) and only then, external capital account liberalization. It may be of some use to offer the following brief comments for the benefit of professionals in other fields, other than economics and law and development. Current account liberalization refers both to the reduction of tariffs, as well as, the elimination of restrictions on payments for current account transactions. Domestic financial reform includes elimination of “financial repression” (repressive regulations that inhibit free competition), “crony capitalism” (the practice of permitting or requiring state-influenced banks make loans of dubious quality to uncreditworthy cronies of government bureaucrats) and the maintenance of adequate capital reserves against outstanding loans. Capital account restrictions are those that implicitly or explicitly tax or limit outflows or inflows of capital and are not prohibited under the IMF Articles of Agreement. See IMF Articles of Agreement, Art. VI (3) (stating “Members may exercise such controls as are necessary to regulate international capital movements, but no member may exercise these controls in a manner which will restrict payments for current transactions.”). Id. Thailand Malaysia Indonesia Korea
[46] A number of papers deal with political economy of migration and some even attempt to “endogenize” (i.e. explain) immigration policy in terms of choices made by voters under a democratic franchise. This is the essence of the “median voter model” discussed in Section V infra.
[47] This Section draws in part upon Migration, supra note 16. The data presented, however, are mostly obtained from authoritative, primary sources such as UNCTAD and OECD reports. In some cases, I have needed to transform the data for reasons of comparability. The principal UNCTAD publications utilized are, Handbook of Statistics (UNCTAD, Geneva 2004), Development and Globalization: Facts and Figures (UNCTAD, Geneva 2004) and the Foreign Direct Investment (FDI) online database. OECD sources include OECD in Figures (Paris 2005), OECD Factbook (Paris 2005) and online databases, such as, SourceOECD. Data for the US
[48] Gross terms means exports plus imports. Alternatively, it is possible to examine trends in the average level of exports and imports (when adjusted for differing units).
[49] See Handbook of Statistics, Table 7.2 (UNCTAD 2004).
[50] The OECD Factbook reports that for some countries such as Ireland
[51] There are several measures of “openness”. A simple (and very limited) economic measure is the proportion of gross trade to total output. Other economic measures relate to “financial openness” of the country in question, measured perhaps by the degree of foreign penetration of local banking and related financial systems. To scholars in disciplines other than economics “openness” (or inter-connectedness with the rest of the world) conjures up different images and measures. Thus, the sociologist might examine the penetration by foreign multinationals, extent of foreign tourism, international telephone calls made or received, etc. The demographer and anthropologist would likely focus on the changing ethnic mix of the local country’s population, linguistic and culinary transformations, extent of inter-marriages and related measures. To the political economist and to the international relations theorist, “openness” may be consonant with erosion of national political sovereignty and the increasing ascendancy of international norms and legal cultures. In an attempt to catalog and standardize measures of economic openness and globalization, the OECD has published a new handbook entitled OECD Handbook on Economic Globalization Indicators (OECD, Paris 2005).
[52] See, e.g., Globalization in Historical Perspective (Michael Bordo, Alan Taylor & Jeffrey Williamson eds., Univ. of Chicago Press 2003); Jeffrey Williamson & Kevin O’Rourke, Globalization and History: The Foundations of a 19TH Century Atlantic Economy (MIT Press 1999); James Foreman-Peck, Historical Foundations of Globalization (Edward Elgar Publishing 1998); Jeffrey Williamson & Kevin O’Rourke, When Did Globalization Begin, 6 Eur. Rev. Econ. Hist. 23 (2002).
[53] Several countries and governments were inspired by Maoist and Marxist ideas to close their economies to outside influences, particularly, foreign investment. The “dependencia model” of American economic imperialism and corporate aggression was developed by Latin American economists and political theorists in the 1970s and was a less extreme version of Maoist/Marxist views. The “dependencia” model was particularly inhospitable to foreign multinational investment, viewing the latter as often being the precursor of outright colonization (as may have been the case with the experience of the British East India Company).
[54] See e.g. John Helliwell, How Much Do National Borders Matter? (Brookings Inst. Press 1998)
[55] Physical capital movements (otherwise known as foreign direct investment or FDI), is classified as long-term, while portfolio capital movements are recorded in the short-term capital account of the balance of payments. The principal reason for the difference in classification is that long-term capital movements are thought to be motivated by different economic considerations than flows of short-term capital. It is often stated that long-term capital movements are guided by the “true investment motive”, while short-term capital is thought to respond to the possibility speculative profits.
[56] See Main Economics Indicators, FDI Database, UNCTAD.
[57] Cross border mergers and acquisitions also occurred at an increasing pace over this period. In 1990, approximately 5,000 cross-border mergers and acquisitions were notified to UNCTAD and in 2000, there were 15,000 such mergers. See World Investment Report 2005, UNCTAD; FDI Online Database.
[58] The reasons for the increase in both trade and capital flows have been myriad. With respect to trade flows, the chief reasons are reductions in transport and communication costs and the consciously liberalizing trade regimes adopted in many countries, either under the auspices of the WTO or via bilateral/plurilateral trade accords. Average transport costs for imports fell from approximately 8 percent of total import costs in 1970 to about 3 percent in 2002. See Mark Dean & Maria Sebastia-Barriel, Why Has World Trade Grown Faster Than World Output? Quarterly Bulletin, Bank of England
[59] International migration statistics are patchy and subject to problems of comparability. These difficulties are due to the differing migration and naturalization regimes in place in various countries. There are also terminological disparities across countries. Countries of settlement (such as the US Canada New Zealand Australia
[60] Available evidence suggests that, if anything, per capita income gaps between the rich and poor countries and, in particular, gaps in other broader indicators of human development or “wellness” have widened in recent years. See Human Development Reports, United Nations Development Programme (UNDP), Various Issues and the World Development Report 2006; Equity and Development, World Bank (2005).
[61] Internal migration literature of early vintage can be traced to the now-classic work of Harris and Todaro among others; John Harris & Michael Todaro, Migration, Unemployment and Development: A Two-Sector Analysis, 60 Am. Econ. Rev. 126 (1970). More recent literature on migration includes Oded Stark, The Migration of Labor (Basil Blackwell 1991) and Altruism and Beyond (Cambridge Univ. Press 1999). Similarly, the literature on voluntary international migration virtually always includes the expected wage gap between the host and sending countries as explanatory variables. See, e.g., George Borjas, The Economics of Immigration, 32 J. Econ. Literature 1667 (1994); Issues in the Economics of Immigration (George Borjas ed. Univ. Chicago
[62] See discussion infra Sections V and VI.
[63] It should be emphasized that the text refers to immobility of labor flows across borders, relative to the much greater mobility across borders of goods and of capital. In absolute numbers, cross-border labor flows, on a worldwide basis, have indeed been increasing steadily. However, the rate of growth of international labor flows has been far smaller than that for growth in cross border trade in goods, services and capital.
[64] Beginning in the mid-eighties of the last century, cross-border labor flows have increasingly included an illegal component. In some countries, inbound immigration, especially illegal immigration, has been a new experience. In the past, such countries had traditionally been “sending” countries. For example, countries in the Southern Cone of Europe, such as Greece Italy Spain Portugal Asia Italy Greece Albania Spain Dominican Republic El Salvador Europe
66 See, e.g., Krugman, supra note 58; Jeffrey Sachs & Jeffrey A. Warner, Economic Reform and the Process of Global Integration, 1 Brookings Papers on Econ. Activity 1-95 (1995). In addition, the various books and papers cited in note 52 (by Bordo and Williamson and others) are regarded by many as mandatory reading in the economic history of globalization.
66a See however, Dani Rodrik, Has Globalization Gone Too Far? Inst. for Int’l Econ. (1997) (criticizing mainstream economists for downplaying the dangers of globalization); Gary Burtless & Robert Lawrence, Globaphobia: Confronting Fears About Open Trade (Brookings Inst. Press 1998) (suggesting that free trade is not the principal cause of loss of skilled manufacturing jobs in the US
[67] See Krugman, supra note 58; R. Faini et al, supra note 16.
[68] See table in the text.
[69] A complementary relationship between trade and migration can also be observed in the European Community during the early years of European integration, i.e., in the 1960s.
[70] The first US Northern Europe US US
[71] This Section will likely contribute little to further the understanding of professional trade or labor economists. Nevertheless, as indicated previously, even in economic research, there has been relatively little effort to integrate the work of trade theorists and researchers in labor economics. This integration is the focus of the present (and subsequent) section(s). The length or detail of the present Section may be attributed the unavailability of readily accessible pertinent analytical materials on trade and migration for legal professionals.
[72] It should be pointed out that the ostensible purpose of both trade and immigration laws is grounded in economics. The overwhelming majority of trade legislation is directed at “leveling the playing field”, i.e., at permitting free market forces from determining the patters and extent of trade. To this end, there exist anti-dumping statutes, countervailing duty laws, unfair trade practices remedies and Escape Clause relief etc. A pre-condition of determining the nature of the “playing field” and whether it is “level” or not, is at least, some understanding of the patterns and extent of trade that would prevail between countries in the absence of distortion of free market forces, that is, under the unfettered operation of “comparative advantage”. Unlike trade, migration is determined, in part, by absolute rather than comparative advantage. Migrants move across borders, partly in response to perceived absolute compensation differentials, although there may be (unlike trade), significant non-economic reasons as well, such as familial ties and affection. There is no doubt that concerns that attend large-scale immigration into a country are partly infected by xenophobic concerns. In the post-modern world of today, ethnic homogeneity is no longer a defensible reason that can palatably be offered by the majority of lawmakers in crafting immigration policy. Instead, public policy debates on immigration focus on the deleterious economic effects (if any), of immigration, for example, upon natives’ jobs and wages, fiscal burdens upon the host state and occasionally, upon increased criminal activity that may accompany an influx of foreigners. Racist and religious resentment and exclusion of certain aliens has had a long history in the United States Chester Southern Europe United States University Chicago Press Rutgers University
[73] For instance, it could be the case that the basic Heckscher-Ohlin model of trade (to be discussed below) is more suited to analysis of US US Europe US
[74] One can readily observe that successful restriction of inbound immigrant inflows into one country is likely to increase immigrant inflows into other destination countries, unless the latter also restrict their policies (i.e., a negative externality may exist). In other words, total inflows of immigrants into developed destination countries require policy coordination across all likely destination countries.
[75] Domestic import-competing industries experience a double blow from trade liberalization. First, cheaper imports threaten such industries directly. Second, as domestic exports increase to supply the world market, wage rates begin to rise across the entire economy, further squeezing the profit margins of import-competing industries.
[76] This phenomenon is precisely what is currently observed in the US China US China China US India
[77] Economic analysis, on the other hand, typically assumes that the policy stance is given and fixed (i.e. exogenous).
[78] Hence, the often-repeated statement (made in the context of the public debates leading up to the NAFTA Accords), that the US US
[79] Thus, if there are two countries A and B, each capable of producing goods X and Y, and if the relative price of X (compared with the price of good Y) were lower in Country A, then Country A definitionally has a comparative advantage in producing good X, while Country B has a similar comparative advantage with respect to good Y. It is of logically impossible for any country to possess a comparative advantage in all goods and what matters for trade is the existence of comparative advantage, not absolute advantage. Thus, Country A may have lower absolute costs of production for both goods X and Y than Country B, but it could only possess a comparative advantage in the production of one good. This insight is often attributed to David Ricardo, a late eighteenth-century English political economist. See David Ricardo, Principles of Political Economy and Taxation (1817).
[80] The term “natural endowments” refers to the existing relative stocks of capital, labor or land in a given country. The reasons for differing natural endowments are not inquired into in the basic framework. In some instances, the endowments of factors are truly natural; for example, Saudi Arabia Iraq
[81] To add some descriptive content, assume that A is America Brazil America America Brazil America Brazil
[83] Historians have documented flourishing trade links across vast distances even in medieval times. For example, commercial trade in spices, yarns, metals and other goods between the Far East and Europe flourished along the Silk Road for a period of over 2000 years (between 500 B.C. and approximately, 1500 A.D.). The Silk Road was a 4000 mile-long network of inter-connected roads and caravan tracts linking China, India, the Near East and Europe. By the early 16th century, the development of cheaper and safer sea transport led to the demise of the Silk Road Near East
[84] This is known as the specific factors model (i.e., factors of production are specific to certain sectors of the economy and not easily transferable across sectors or industries). This formulation is commonly attributed to the seminal work of Ronald Jones. See Ronald Jones, A Three-Factor Model in Theory, Trade and History, in Trade, Balance of Payments and Growth (Jagdish Bhagwati ed., North Holland 1971).
[85] Much of the work in the context of increasing returns to scale and other externalities was pioneered by Krugman and Helpman. See, e.g., Elhanan Helpman & Paul Krugman, Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy (MIT Press 1987); Paul Krugman, Geography and Trade (MIT Press 1992).
[86] Specialization in certain occupations or sectors is more likely to affect labor, rather than capital. Trade liberalization inevitably causes the import-competing sector to shrink and the labor employed in that sector to be laid off. It is precisely the recognition of these adverse effects of trade upon certain types of labor that is the basis of trade adjustment assistance programs in the US
[87] See, e.g., Anthony Venables & Victor Norman, International Trade, Factor Mobility and Trade Costs, 101 Econ. J. 1488 (1995); J. Peter Neary, Factor Mobility and International Trade, 28 Canadian J. Econ. S-4 (Special Issue 1995).
[88] An example of a specific factor that is internationally mobile could be highly skilled information services workers or medical personnel. US US
[89] The literature on the “brain drain” is simply too extensive to be surveyed or even be extensively referenced in this paper. The notion of the brain drain involves a paradoxical subsidy from poorer to richer nations. Secondary and tertiary education in most developing countries is provided at public expense. To this extent, the public in these countries has “invested” in training professionals and skilled workers, but the benefits of the educational investment are only captured by the richer host countries. At the same time, the latter countries also stand to gain expected tax revenues when these professional workers commence employment in he host countries. The early seminal work on the brain drain of Jagdish Bhagwati proposed a tax on professionals emigrating from developing countries, in order to compensate the latter. See Taxing the Brain Drain: A Proposal (Jagdish Bhagwati & Martin Partington eds., North Holland 1976). An offsetting factor might be the remittances that immigrants (once settled in the host countries) transfer to relatives left behind in the source country. For some labor-exporting countries such as Pakistan Mexico Philippines Nicaragua El Salvador Ch. Univ. US Washington DC
[90] See for example, Avinash Dixit & Victor Norman, The Theory of International Trade (Cambridge Univ. Press 1980); James Markusen, Factor Movements and Commodity Trade as Complements, 14 J. of Int’l Econ. 341 (1983); James Markusen, Multinational Firms and the Theory of International Trade (MIT Press 2002).
[91] Hence, the term “core-periphery” models. See Krugman, supra note 85.
[92] See supra note 96 for a discussion of trade adjustment relief petitions. The term “safeguard measures” generically encompasses antidumping actions, 19 U.S.C. §§ 1671-77, Escape Clause actions, 19 U.S.C. §§ 2251-53 and Unfair Trade actions under Section 301, 19 U.S.C. §§ 2411-2420. There has been considerable writing on the relationship between the business cycle and the number of anti-dumping complaints filed. See, e.g., Douglas Irwin, The Rise of US Antidumping Actions in Historical Perspective, NBER Working Paper No. 10582, June 2004; Michael Knetter & Thomas Prusa, Macroeconomic Factors and Antidumping Filings: Evidence from Four Countries, 62 J. of Int’l Econ. 1 (2003).
[93] Perhaps this is so, because interest groups and voters may be more easily organized around visible and tangible symbols of integration in the form of immigration of persons, rather than the ubiquitous presence of foreign goods that are consumed. Alternatively, the focus on immigration rather than trade in this discipline may be attributed to the academically- instilled inclination of political economists to focus on issues of social and political membership. Immigration of persons, their assimilation and political incorporation, fits comfortably within the political economist’s paradigm; issues relating to trade in goods do not enjoy any such comfortable niche in the paradigmatic toolkit of political economists and public choice theorists.
[94] See supra note 61 and accompanying text.
[95] Under current immigration law, of the 675,000 annual limit of immigration into the US US US Canada Australia Canada Australia United Kingdom US Canada US
[96] It has been noted for example, that during the 1980s, US US Mexico US
[97] For example, recent work in sociology and anthropology has attempted to introduce quantitative proxies for social networks in estimating migration probabilities. This body of work is concerned in the main, with the causes of immigration decisions made at the individual level. By contrast, political economy or public choice analyses have concerned itself with the state’s choice of immigration policy. See Section VI infra.
[98] Oded Stark & J. Edward Taylor, Migration Incentives, Migration Types: The Role of Relative Deprivation, 101 Econ. J. 1163-78 (1991).
[99] Previous work on internal migration in a country was pioneered by Harris and Todaro, both cited at note 61 supra and has focused on absolute differentials in wage levels across the rural and urban sectors, costs of migration, probability of securing an urban job etc. These factors may be summarized as differentials in the present value of expected incomes in the rural and urban sectors respectively.
[100] In more concrete terms, in the case of Mexico US Mexico US US
[101] US US
[102] In addition, in the US U.S. Tex.
[103] Stark & Taylor, supra note 98.
[104] Households with very high incomes are also not likely to be sending units, as members of such households can enjoy a comfortable existence at home, without assuming the risks of international migration.
[105] See James Foreman-Peck, A Political Economy Model of International Migration 1815-1914, LX Manchester
[106] For example, Canada Argentina
[107] See, e.g., Williamson & O’Rourke, supra note 52.
[108] Another variation of this theme is that the host country may welcome low skill immigrants in order to place them in occupations with little job security. As a result, the overall labor market is more flexible and in a recession, disenfranchised can easily be “dumped” without political cost.
[109] This has clearly been the case for the colonizing powers of the nineteenth century, such as Britain France Portugal Spain Germany Algeria France India Pakistan United Kingdom
[110] Foreman-Peck, supra note 105.
[111] See Stephen Nicholas & Peter Shergold, Intercountry Labor Mobility During the Industrial Revolution, 39 Oxford
[112] As is well-known, the US US
[113] The median voter model has a long and venerable vintage in political choice theory and is the simplest model of majoritarian decision-making. Social decision-making rules seek to “aggregate” or somehow account for preferences of individuals, in constructing group decision rule. The majority voting rule necessarily accounts for the preferences of all members. There was no clear exposition of the median voter theorem until the work of Duncan Black and its extension thereafter, to representative democracies by Anthony Downs. See Duncan Black, On the Rationale of Group Decision-Making 56 J. Pol. Econ. 23 (1948); Anthony Downs Yale Univ.
[114] See Jess Benhabib, On the Political Economy of Immigration, 40 Eur. Econ. Rev. 1737-43 (1996).
[115] See Claudia Goldin, The Political Economy of Immigration Restrictions in the United States
[116] This result is not inconsistent with the preference of business employers in developed nations to import highly-skilled labor, for example, through specialty visas or a “points” system of immigration. When there is a shortage of such skilled workers in the native labor force, the median voter in the receiving country is not threatened by immigration of skilled labor. The model and its results are also consistent with the median voter’s preference to tolerate unskilled labor immigration, including undocumented aliens in certain sectors of the economy. See also infra for permissible illegal immigration.
[117] The work on assimilation and socio-economic membership has largely taken the path of field studies of cohorts of sample immigrants and their succeeding generations.
[118] See A. Davila and J.A. Pagan, The Effectiveness of Selective INS Monitoring Strategies on the Industrial Employment Choice and Earnings of Recent Immigrants 35 ECON. INQUIRY 138 (1997).
[119] In the US US
[120] See Arye Hillman and Avi Weiss, A Theory of Permissible Legal Immigration 15 EUR. J. POL. ECONOMY 585 (1999).
[121] In the US US
[122] The Bracero Program in the US Mexico US US AMERICA Greenwood Germany Italy Spain Greece Turkey
[123] For instance, the H-1B Visa Reform Act of 2004 (effective date March 5, 2005) was intended to provide temporary relief from the numerical cap on such specialty occupation visas, since the annual cap had already been reached several months prior to the end of the 2005 federal fiscal year.
[124] See for example, DOUGLAS BAIRD, ROBERT GERTNER AND RANDAL PICKER, GAME THEORY AND THE LAW (Harvard University Press 1998).
[125] J. Atsu Amegsahie, A Political Economy Model of Immigration Quotas 5 ECON. GOVERNANCE 255 (2004).
[126] Some earlier empirical work appears to lend support to this proposition. See, W. Shugart
[127] There has been some work applying interest group analysis to certain facets of US
[128] See however, NANCY
[129] The exploration of assimilation and incorporation is sometimes described as follows: It is the study of “what happens when the people we study about in school, end up living next door to us”.
[130] There have been only a few empirical studies of the political incorporation of immigrants by ethnic origin. One such interesting work is by Jan Juan, Participation in Liberal Democracy: The Political Assimilation of Immigrants and Ethnic Minorities in the United States in NANCY FONER ET AL (EDS.) IMMMIGRATION RESEARCH FOR A NEW CENTURY cited at note 154 supra. Juan finds that while Asian-Americans have the most education among various ethnic groups (including Caucasian American) and higher median incomes, they are the least politically active of all groups.
[131] In extreme circumstances, dissatisfaction with the socio-political status quo is theoretically the precursor to a Marxian “class struggle”. Today, such struggles take the form of secessionist movements, ethnic strife or violent confrontations across ethnically diverse groups.
[132] “Whiteness” in ethnic studies is a relational concept, rather than a biological one. For an examination of the role of “whiteness” in the context of immigrant assimilation, see MATTHEW JACOBSON, WHITENESS OF A DIFFERENT COLOR: EUROPEAN IMMIGRATION AND THE ALCHEMY OF RACE (Harvard University Press 1998).
[133] See C. Tiebout, A Pure Theory of Local Expenditures, 64 J. Pol. Econ. 416-24 (1956). Later work includes A. L. Hillman, The Political Economy of Migration Policy, in Migration: A Challenge for Europe (Horst Siebert ed., Mohr Inc. Tubingen 1993).
[134] See, e.g., Global Networks, Linked Cities (Saskia Saasen ed. Routledge 2001). There is a vast literature in sociology, demography and related disciplines on social networks and selected references appear below.
[135] For publicly provided goods, such as the services of a free public park, consumption of park services by one person does not reduce the consumption opportunities of another person. In addition, one consumer is not able to exclude another from enjoying the services of the same park. These characteristics of markets for public and private markets are discussed in detail in any standard text on law and economics. See, e.g. Robert Cooter & Thomas Ulen, Law and Economics (4th ed., Addison Wesley 2003).
[136] See Saasen, supra note 134. In addition, the interested reader is referred to Saskia Saasen, The Global City (2d ed., Princeton Univ.
[137] Witness for example, the concentration of persons of Iranian origin in Los Angeles Los Angeles Iran Iran Los Angeles Los Angeles Britain Germany Berlin Europe EUROPE
[138] Immigration and Nationality Act Amendments of October 1965, Pub. L. No. 89-236, 79 Stat. 911 (1965). The White Australia
[139] See supra notes 15 and 89 discussing the brain drain.
[140] See Migration Theory: Talkng Across Disciplines (Carol B. Bretell & James Hollifield eds., 2000) for a useful attempt at cross-fertilization of various disciplines.
[141] For the most part, scholarship in international relations deals with migration through its focus on political participation and sovereignty. A discussion of trade issues does not fit comfortably within these tools of analysis.
[142] It was only in the Sixteenth and Seventeenth centuries in Europe
[143] Sociologists such as Massey have long emphasized the role of social networks in both sending and receiving countries. See, e.g., International Migration: Prospects and Policies in a Global Market (Douglas Massey & J. Edward Taylor eds., Oxford Univ. Press 2004) (International Studies in Demography); Worlds in Motion: Understanding International Migration (Douglas Massey, Joaquin Arango & Graeme Hugo eds., Oxford Univ. Press 1999). The role of transnational communities in explaining migration has been explored by several authors, including, Alejandro Portes & Rubin Rumbart, Immigrant America: A Portrait (Univ. of California Press 1996); Alejandro Portes, Immigration Theory for a New Century, 31 Int. Migration Rev. 799-825 (1997); Alejandro Portes, Transnational Communities: Their Emergence and Significance in the Contemporary World System, in Latin America in the World Economy (R. P. Koreniewidez & W.C. Smith eds., Greenwood Press 1996); Saskia Saasen, Losing Control: Sovereignty in An age of Globalization (Columbia Univ. Press 1996).
[144] In this context see Gary Freeman, Models of Immigration Politics in Liberal Democratic States 19 INT’L MIGR. REV. 881 (1995), Gary Freeman, Can Liberal States Control Unwanted Migration, 534 ANNALS OF THE AMER. ACADEMY OF POLITICAL AND SOCIAL SCIENCES
[145] A contrary school of thought suggests that central national authority over immigration may have been deliberately ceded to local “gatekeepers” including local municipal authorities and private, non-state actors. This view goes beyond the monolithic vision the central state as being the sole gatekeeper of immigration policy. For example, in France US US US Europe
[146] See Saasen, supra note 136. As Saasen observes, global cities such as these are characterized by inter-relationships among each other to a much larger extent than the relationships between these cities and others in the national territories of the where these mega-cities are located. Thus, the mutual inter-relationships between New York London London Edinburgh
[147] William Collins, Kevin O’Rourke & Jeffrey Williamson, Were Trade and Factor Mobility Substitutes in History?, NBER, Working Paper No. 6059 (1997), reprinted in MIGRATION, supra note 16. See also Jeffrey Williamson, Winners and Losers Over Two Centuries of Globalization, Working Paper No. 9161, National Bureau of Economic Research (2002); Timothy Hatton & Jeffrey Williamson, What Fundamentals Drive World Migration, Discussion Paper 2003/23, United Nations Univ. (2003).
[148] See, e.g., Allen Kelley & Jeffrey Williamson, What Drives Third World City Growth? (Princeton Univ. Press 1984).
[149] To econometricians, this is known as the presence of multicollinearity. An appropriate technique to obtain unbiased estimates in this case, is by means of “instrumental variables”. In the present case, it is not at all clear if suitable “instruments” can be found.
[150] In part, this may stem from the fact that skilled labor embodies “human capital”. In addition, migrating flows of labor may also be accompanied by financial or physical capital. For example, investment visas or employment-creation visas are made available to qualifying potential entrants under US immigration laws.
[151] Collins et al, supra note 147.
[152] Ashley Timmer & Jeffrey Williamson, Racism, Xenophobia or Markets? The Political Economy of Immigration Policy Prior to the 1930s, Working Paper No. 5867, National Bureau of Economic Research (1996); Ashlety Timmer & Jeffrey Williamson, Immigration Policy Prior to the 1930s: Labor Markets, Policy Interactions and Globalization Backlash, 24 Population & Dev. Rev. 739 (1998). See also Goldin, supra note 115.
[153] For additional details on immigration patterns in Argentina Argentina
[154] For a promising start, however, see Kevin O’Rourke & Richard Sinnott, The Determinants of Individual Attitudes Toward Immigration, Working Paper, Trinity College
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