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immigration > midterm > Flashcards

midterm Flashcards

1
Q

economic characteristics of immigration:

A

movement of factors of production from one country to another which affects the returns to all factors of production (capital and labor)
Immigrants are also consumers and this affects the demand for goods and services
Immigrants also carry new ideas and knowledge, key to economic growth
On other hand immigrants may use public services and impose costs to the host society

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2
Q

Push factors

A 
Famine and poverty
Low wages and unemployment
Overpopulation
High taxes
Discrimination, religious  persecution , violence and civil wars
Social immobility
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3
Q

Pull factors

A 
Higher wages and employment opportunities
Property rights, Law and order
Personal, religious and economic freedom
Peace
Social mobility and educational opportunities
Gender equality
Lower taxes
Family reunion
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4
Q

Stay factors

A 
Family and friendship ties
Social status
Employment
Familiarity with culture and certainty
Political and professional privileges
Property
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5
Q

Stay away factors

A 
Language and cultural barriers
Discrimination
Low social status
Unemployment and low wages
Lack of political rights
Uncertainty and unfamiliarity
War and crime
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6
Q

Formal exit barriers

A 
Exit visa
Exit or departure tax
Prohibition
Imprisonment
Penalties on Family
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7
Q

Formal entry barriers

A 
Entry Visa
Quotas
Prohibition
Imprisonment
Fines
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8
Q

Factors discouraging immigration

A

Immigration is costly bc of the cost of moving and the opportunity cost of maybe a position in a new country you are overqualified for
Dangers of the actual travel

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9
Q

Determinants of migration

A

Immigration policy id the most important determinant
Disparity in income is the second most important determinant (econ theory predicts that migration will level salaries)
Families toes, established communities

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10
Q

Econ forces which influence migration

A

Economic growth since the early 1900s has varied greatly from country to country resulting in huge discrepancies (between-country inequality)
lowered transportation costs.
Improved communications
The 20th century surge in population growth in developing countries.

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11
Q

Between country inequality vs. In country inequality

A

The major increase in inequality has occurred between countries
Most of the increase took place before WWII
Most of the current world inequality occurs between countries

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12
Q

History of migration

A

See slides

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13
Q

Labor migration

A

1955-1973): Germany, Austria, the Netherlands, Belgium, Sweden and other Northern European countries recruited unskilled workers from Southern European countries (Spain, Portugal, Greece…). Net immigration from the Mediterranean countries in the period 1955-1973 amounted to 5 million migrants (Zimmerman, 1995).

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14
Q

North vs South

A

Most migration is South-South and South-North. Then North-North . South is poor , north is rich

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15
Q

5 immigrant categories

A

Permanent settlers: people who enter a country with the intention to remain there permanently
Contract workers or professionals: people that move to another country to perform a specific type of work (agriculture, tourism, construction) on a temporary basis or to perform a technical or management job.
Asylum seekers and refugees: people who left their countries to escape political, religious, or social persecution as well as threats to their safety
Unauthorized/Undocumented immigrants: people who cross borders in violation of the laws of the destination country. It is very difficult to estimate the number of unauthorized immigrants.
Involuntary immigrants: some people are still forced to migrate (human trafficking: child labor and prostitution).

Of course some immigrants fall into more than one category.

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16
Q

Modern theory of migration looks at the migrant as either

A

supplier of factor services, a maximizing investor in his or her human capital
Or as a consumer of amenities and/or public goods.

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17
Q

Migrant as an investor in human capital

A

Human capital is education and health
This model implies that the immigrant chooses the location which offers the highest net income.
Since labor income is a return to human capital, migration is viewed as an investment in one’s human capital
This view draws back to Becker and Sjaastad (1962)
Sjaastad argues that a prospective immigrant calculates the value of the opportunity available at each alternative destination, subtracts the costs of moving and chooses the destination that maximizes the present value of lifetime earnings.

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18
Q

Mincerian rates of return to education calculation

A

=(wages w degree-wages foregone while getting degree) /wages foregone while getting degree Divide by how many years tom find the rater year.

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19
Q

Migrant as investor in human capital, the costs

A

Sjaastad uses distance as a proxy for migration costs.
Other monetary expenses include losses from selling material goods (house…), loss of seniority…
The model does not include non-monetary gains.

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20
Q

Migrants as investors in human capital, Sjaastad model shortcomings

A

It’s a single period model, cannot explain multiple migrations in a lifetime.
The unit of analysis is the individual as opposed to the household.
It assumes that migrants are perfectly informed about job opportunities
Finally remittances and changes in the exchange rate are not considered

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21
Q

Migration as life cycle decision

A

A young person may have a strong preference for locations with other young people, restaurants and high income.
On the other hand, a person nearing retirement may have stronger preference for locations with good climate and a good healthcare system.
As a consequence it is very likely that there will be multiple migrations during a person’s life.

22
Q

Migrant as a consumer, affect on wages and rent

A
  • person’s utility function includes goods and services that are not available everywhere.
  • Desirable goods that are not available universally are called amenities and include such things as scenery, weather, clean air…
  • The demand for amenities may change as a person moves from on phase of his life cycle to another, as culture changes or as economic growth changes incomes.
  • Amenity rich areas will experience immigration, driving down wages and driving up housing prices.
  • In amenity poor areas wages will rise and rents will fall.
  • There will be a new set of interregional wage, rent and price differentials that reflect the compensation for the amenities.
23
Q

Tiebout hypothesis

A

theory also extends to public goods including parks, hospitals, schools, roads, courts, police protection…the idea that people vote with their feet
The first part is that households decide where to live based in part on communities’ service-tax packages.
The second part is that community selection results in efficient levels of local public services, in the sense that each household ends up with the service-tax package it prefers.

24
Q

Role of past migration

A

The community of family and friends is referred to as a kinship network.
The community of earlier migrants from a similar ethnic or regional background is referred to as migrant network.
Migrant and kinship networks can lower job search costs, the costs of securing house and child care, and stresses associated with migration.

25
Q

Borjas model intro

A

-reflects that people in the source and destination countries are not the same in their ability, education, experience, age, motivation (socio-economic background).
-It is important also to make a distinction between observable and unobservable variables.
Ex. Its easier for a Mexican to move to spain than Germany because those factors match more with spain.
Observable skills- education, language
Unobservable- teamwork skills, motivation, punctuality, hard working or not, commitment. These are generally very difficult to take into account when doing economical analysis

26
Q

Borjas model: migration depends on

A
  • how a would-be migrant with a specific set of skills would fit in a specific labor market with a certain distribution of workers characteristics.
  • The migration decision depends not just on the salary differences but on how well the worker’s abilities and other human capital can be applied in the destination country.
  • A migrant might have some fantastic characteristics, but they may or may not be a great match to labor market needs in certain countries.
27
Q

Borjas model predictions

A
  • The migration rate will rise if the destination country’s mean income rises.
  • The migration rate will rise if the source country’s mean income falls.
  • The migration rate is lower the higher are migration costs
  • The migration rate rises if the degree of skills transferability rises.
  • The migration rate is higher, the higher is the mean level of schooling in the source country.
28
Q

Mincers model, household

A
  • requirement for migration to take place is that the family’s net gains be positive.
  • If the family’s private gains to migration are positively correlated, then migration is always the efficient action.
  • If they are negatively correlated, there are two scenarios:
  • The wife experiences a gain, the husband a loss, but the joint gains are positive. The model predicts a tied mover.
  • If the husband’s loss dominates, then she becomes a tied stayer.
29
Q

Portfolio decision making as a household

A

migration serves to hedge against risky labor markets at home.
The family can reduce risk through diversification.
Some members stay in the local economy
Others are sent to foreign labor markets with diverse economic conditions

30
Q

3 big categories for determinants why people migrate

A

Economic, social, political

31
Q

Immigrants typically self-select in response

A

response to international differences in returns to skills and education.
Immigration policy also plays an important role.

32
Q

selectivity bias.

A

immigrants are different from the average citizen left behind in their country or the native born living in the destination country

33
Q

Negative selectivity bias vs positive bias

A

Negative bias: immigrants have skills below the average

Positive bias: immigrants have skills above the average

34
Q

Because immigrants self-select they are unlikely to be

A

an unbiased sample of either the origin country’s population or the destination country’s population.

35
Q

Immigration Selection: Chiswick vs. Borjas

A
  • Chiswick (1978) presented evidence that in the US immigrants tended to be more productive and earn more than native-born Americans.
  • Borjas (1987, 1991) argues that immigrants from developing countries tend to be less productive and earn less than natives in more developed destinations.
  • This has led to discussions on whether immigration is beneficial or harmful for the destination country.
36
Q

Immigration Selection: Chiswick

A
  • Chiswick develops a model to show how immigrants self-select in ways that tend to make them as a group, relatively more ambitious, harder working and more likely to succeed in the destination country.
  • His results show that higher immigration costs are associated with a selectivity bias towards those who expect to earn the highest wages in the destination country, probably the relatively high-skilled, highly educated and well-connected immigrants
37
Q

Immigration Selection: Borjas

A

-His model predicts that all other things being equal, immigrant selectivity results from:
-International differences in the return to skills
-The degree to which skills are transferable across borders as mentioned in the previous chapter.
-He finds that immigrants self-select in response to:
The skill premium,
The observed distribution of skills across the source and the destination countries’ populations and their own skills.
-Additionally he finds that these immigrants do not end up earning high incomes in the destination country.

38
Q

Borjas obtains a number of important predictions for selection bias in the destination country:

A
  • Greater prosperity in the source country will cut the size of the immigrant flow.
  • An increase in migration costs will enhance selectivity. This conclusion assumes that costs do not vary with skills.
39
Q

migration costs are inversely related to earnings for three reasons:

A
  • More educated people posses the necessary skills to satisfy the paperwork requirements to obtain legal admission more easily.
  • The burden of legal costs is higher for low-income immigrants.
  • Lower-income individuals tend to face higher borrowing costs because of a higher likelihood to default.
  • As a consequence Mexican migrants will tend to be modestly skilled (because very unskilled dont have the money to migrate, and the very skilled get good salaries in mexico)
40
Q

Immigration Selection: credit constraints

A
  • undocumented migrants must pay border crossing expenses in advance and since they lack access to credit, these costs must be financed from savings.
  • Savings depend on earnings and earnings depend on skills.
  • As a consequence the least skilled are less likely to migrate.
  • that unauthorized Mexican immigrants tend to be slightly more educated than the average Mexican native.
41
Q

Smuggling migrants

A

Lack of hygiene, exhaustion, thirst, hunger and long waiting times are faced by almost all the travellers (more than 70 per cent of migrants). disease, rape, arrest, robery all happen to smuggled migrants

42
Q

Immigration Selection: Family Migration

A
  • When returns to skills are greater in the destination country, there is a selection bias towards higher skilled migrants under both family and individual migration, but the degree of positive selection will be lower under family migration.
  • When returns are lower in the destination country, selection will be biased towards lower-skilled migrants under both individual and family migration.
  • average skill levels of US immigrants have declined because of the family reunification visa
43
Q

Immigration Selection, the Evidence: Borjas

A
  • He finds that source country’s GDP to be significantly related to immigrant education and skills.
  • US immigrants increasingly come from developing countries which provides some support for his hypothesis.
  • As a result of comparing his results for these three countries, Borjas argues that US immigration policies have had a negative effect on the average skills and education levels of immigrants
44
Q

Immigration Selection, The Evidence (other economists)

A
  • changes in immigrant salaries are a result of changes in immigrant characteristics and changes in the overall wage structure in the US economy.
  • The wage gap between low educated and highly educated workers has increased substantially in the last 40 years.
  • The authors conclude that the rise in the immigrant-native gap was mainly due to the increase in the wage premium for college educated workers in the US and does not reflect a reduction in the immigrant skill level.
45
Q

The College Premium

A

The college premium can be measured as the ratio of wages for college educated workers to those with a high school education

46
Q

Why did the college wage premium increase?

A
  • The reason rates of return to college education have been rising in recent years is because the wages of highly-educated workers have been increasing at a much faster rate than the wages of less-educated workers.
  • For instance, when one compares the wages of college graduates over time –adjusted for inflation– one finds a substantial growth since the early 1980s.
47
Q

Why have rates of return to education increased?

A

Technological Change is the major factor affecting the rise in returns to education.
- allow college grads to be more adjusted to change

48
Q

The theory of Immigrant Assimilation

A
  • the process whereby immigrants’ incomes catch up to native incomes in the destination country.
  • According to Chiswick, earnings assimilation will be stronger and faster the more biased is the selectivity of immigrants towards immigrants with innate ability and motivation.
49
Q

The theory of immigrant assimilation: the evidence

A

-As immigrants acquire this type of human capital (language, domestic work experience, education) their wages will converge to native wages.
-Immigrants earn 17% less than comparable natives at arrival.
-The gap is narrowed by over 1% per year.
Immigrants overtake natives after about 10-15 years (depending upon the country of origin).

50
Q

Borhs and the assimilation evidence

A
  • Borjas argues that Chiswick’s findings are a statistical illusion since he used cross-section data.
  • If immigrants that arrived in more recent years have fewer of those special unobservable traits, each cohort would have a different age-earnings profile.
  • There is no way to tell from a cross-section data set whether income differences were due to their ability or because groups of immigrants were on different age-earnings profiles.
  • Borjas estimates the degree of bias due to cohort effects, and finds that the cross section approach overestimates earnings convergence substantially.
51
Q

International Assimilation Index

A

the non-economic assimilation of immigrants and construct the international assimilation index in different countries, a common set of factors have to be used.
The set of factors available in each of the nine nations consists of:

Marital status
Employment status
Homeownership
Citizenship

52
Q

Immigrant Naturalization

A
  • Nearly two-thirds of the 5.4 million legal immigrants from Mexico who are eligible to become citizens of the United States have not yet taken that step.
  • Their rate of naturalization—36%—is only half that of legal immigrants from all other countries combined, a

immigration (6 decks)

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