Lecture 7: Globalisation: International Migration

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13 Terms

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What are place premiums?

the equivalent PPP wage for the same skill level

uncontrolled→ comparing people of the same age and sex

controlled→ comparing people of the same years of education

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What was Clemens et al’s work on place premiums?

  • tried to create lower bound estimates of the place premium

  • average wage increase from moving to US from developing country is 5.64times

  • average lower bound absolute wage gain is $13600 PPP

  • shows the potential gains from migration

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Who loses out with migration?

high wage country labourers, as wages decrease due to increased supply of labour

low wage country producers, as input prices increase due to reduced supply

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Who gains with migration?

high wage country producers gain, due to lower input costs of labour

low wage country labourers, due to decreased labour supply so higher wages

migrants obviously gain enormously due to place premiums

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What limits the magnitude of effects of migration?

  • effects dwarf all other barriers (trade, capital flow)

  • barriers to ensure workers in rich countries dont lose out

  • depends on whether migrants are complements or substitutes

  • some studies eg Peri show migrants have zero or positive effects on natives

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why were place premiums smaller in history?

Malthusian mechanism

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what was the purpose/effect of migrations to the NewWorld?

  • to supply resource-intensive commodities in the New World, European had to introduce labour inputs

  • via the slave trade for sugar plantations, cotton etc

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What reasons impacted the amount of migrants?

  • free migrants were only a small share of migrants eg merchants, military

  • minimal formal barriers to cross-border movement

  • smaller wage gaps

  • physical, social, psychic costs

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What were some costs of migration?

  • food and travel

  • lost wages from not working while travelling

  • needed to find a new job in a new country- risky

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when did voyage times start significantly decreasing

1840-1860 due to steam ships

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how did migrants reduce risk?

a few pioneers migrating first, eg 90% of arrivals in US from 1820-1910 meeting a friend or a relative

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how many slaves were transported

12 million

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