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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
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
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
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
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
why were place premiums smaller in history?
Malthusian mechanism
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
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
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
when did voyage times start significantly decreasing
1840-1860 due to steam ships
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
how many slaves were transported
12 million