Globalising labour markets

July 31, 2012

Free Market Foundation

Economists say that the limited migration of skilled and unskilled workers can spur economic growth in developed and developing nations. Among the actual and potential benefits of migrant labour:

The average increase in annual wages for unskilled migrant labourers in 1996 over what they made in their home countries was $7,400, according to preliminary results of a survey by Mark Rosenzweig of the Kennedy School of Government at Harvard University; it was much higher for skilled labour.

Also, one fourth of the workers sent ample sums home; but Rosenzweig points out that such remittances are most productive when the home economy can invest them usefully.

Workers who return home after a few years are often agents of change when they return says Jagdish N. Bhagwati of Columbia University, even if they are unskilled, because they bring back new attitudes, financial resources and knowledge.

If the developed nations in the Organisation for Economic Co-operation and Development increased their quotas of skilled and unskilled migrant labour by 3 percent, world income would rise $156 billion a year or 0.6 percent of total world income, according to L. Alan Winters of the University of Sussex.

Globalisation has led to greater to labour mobility, and the bigger the differences in wages for similar work across the
world, the greater the potential rise in incomes to the receiving and sending nations. It is analogous to the benefits from international trade when goods are cheaper in one country than another.

Source: Jeff Madrick (Challenge Magazine), Immigrant-Labour Economics, Economic Scene, New York Times, January 22, 2004.

For text http://www.nytimes.com/2004/01/22/business/22scene.html

For more on Immigration http://www.ncpa.org/iss/imm/

FMF Policy Bulletin\27 January 2004