Several recent studies (Anderson and Winters 2008, World Bank 2006) have pointed out that substantial gains can be achieved from the liberalisation of international migration flows, both for sending and receiving countries.1 At the same time, recent estimates (Goldin and Reinert 2006), suggest that only 11 million individuals, i.e. just one in six hundred migrate each year. The stock of migrants is larger. The United Nations reports that, in 2005, 190 million individuals, or 3% of the world population, lived outside their country of birth. Still, comparing these figures with the volume of trade or with the large flows of capital in international markets, many authors have concluded that what we are experiencing is a wave of globalisation that includes “everything but labour” (Pritchett 2006, Freeman 2006). In a recent CEPR discussion paper (Facchini and Mayda 2008), we argue that the small size of international migration flows is the consequence of restrictive migration policies that reflect high levels of opposition to immigration in public opinion across destination countries. In addition, policies would be even more restrictive if it were not for the action of interest groups, many of which are pro-migration.
Why are current migration flows so small?
Observed migration flows are an equilibrium outcome resulting from a combination of demand and supply. On the supply side, flows are a function of migrants' decision to move according to economic and non-economic incentives while, on the demand side, flows are shaped by destination countries' migration policies. Recent evidence suggests that the willingness of workers to move across international borders is high. The income gap between poor sending countries and rich destination countries is very pronounced. Population growth in the developing world is much higher than in rich countries. Finally, transport and communication costs have drastically declined in the recent past. Hence, restrictive migration policies appear to be key determinants of the limited flows actually observed.
What determines migration policy?
Leaving aside non-economic considerations, a welfare-maximising government should admit a substantially larger number of immigrants than present policies do. As a result, a purely normative framework is not well suited to explain the policies currently implemented by most destination countries. At the same time, standard economic theory suggests that, whenever migration generates efficiency gains in the receiving country, it has important effects on the distribution of income, creating winners and losers (Borjas 1999). Therefore, political-economy factors based on income distribution effects are likely to be key determinants of observed migration-policy outcomes.
Voters’ opinions represent the key ingredient of any political economy model of a democratic society. In our paper, we find that individual attitudes towards migration are consistent with the predictions of economic models. This is true both in the pre and post-September 11th world. In other words, economic determinants of attitudes have not been overshadowed by emotional and – more in general – non-economic considerations in the aftermath of the attacks on the twin towers in New York.
Does the median voter rule?
Our answer is yes – but only in part. We find that, across countries of different income levels, only a small minority of voters favour more open migration policies. Our results suggest that, in 1995, in more than twenty high- and middle-income countries, less than ten percent of respondents were in favour of increasing the number of immigrants to their country. The fraction of voters in favour of immigration is also very low in 2003. Interestingly, we also find that migration outcomes across destination countries are correlated with the attitude of the median voter – and in general public opinion – in each country (see Figure 1). Thus, policymakers seem to take public opinion into account as they formulate migration policy.
Figure 1. Immigration outcomes and the median voter
Source: Facchini and Mayda 2008.
At the same time, given the extent of opposition to immigration revealed by voters' attitudes, one might wonder why migration is allowed to take place at all. In fact, a simple median-voter model applied to the attitudes we observe in the data would predict the choice of close-to-zero flows, while actual arrivals are non-trivial in number. One very likely explanation of the discrepancy between voters' opinions and the actual size of migration flows is domestic interest groups, many of which are pro-migration. There is abundant anecdotal evidence supporting the role played by interest groups.
For instance, during the “dot com” boom at the end of the nineties, high tech firms intensively and successfully lobbied the US Congress to increase the number of H1-B visas. More recently, hospitals and healthcare providers have been able to secure an increase in the number of H1-C visas to be awarded to foreign nurses. Similarly, in the UK, the Business for New Europe group – an association representing firms –stated that “...the UK should continue with its open door policy", on the eve of the discussion on introducing a cap on migration from Bulgaria and Romania (The Independent, 30 August 2006).
Of course, not all pressure groups favour more open migration policies. Historically, US labour unions have been a very influential anti-immigration lobby. More recently, the AFL-CIO supported measures to reduce illegal immigration that culminated in the 1986 Immigration Reform and Control Act. Similarly, during the recent debate on the nurse shortage, the American Nurses Association has strongly opposed a measure to increase the number of H1-C visas, pointing out that “…the provision would lead to a flood of nurse immigrants and would damage (…) the domestic work force” (New York Times, 24 May 2006).
Our study focuses on the United States and uses panel data covering the period 1994-2005 in which we differentiate labour according to both skill levels and occupations. We find that the lobbying activity of organised labour leads to a reduction in the inflow of foreign workers in the same occupation/education cell – this effect is driven by substitutability – and to an increase in the inflow of foreign workers in different occupation/education cells – this effect is driven by complementarity. Another study finds that the lobbying activity of firms in a sector increases the number of immigrants to that sector (Facchini, Mayda and Mishra 2007).
Thus, our analysis suggests that both the simple median voter and the lobbying model are helpful in understanding how individual attitudes are mapped into immigration policy outcomes.
What are the implications of our findings for policy makers?
First of all, we have pointed out that public opinion is consistently against immigration across a variety of destination countries. Both economic and non-economic considerations explain this pattern in the data.
Governments can do a great deal to affect the negative attitudes implied by these effects. To attenuate the adverse economic consequences of immigration in the labour market, redistribution policies should be implemented to compensate the losers by transferring them some of the gains accruing to the winners. Similarly, in the context of the welfare state, public policy should be more focused on spreading more evenly the losses (in the case of unskilled immigration) or gains (in the case of skilled migration).
From a non-economic point of view, to the extent that the negative perceptions of immigration are ill founded, education policies are clearly necessary. Promoting a culture of tolerance can be very effective and civil society is likely to play an important role in this direction. If, on the other hand, immigration truly has a negative impact from a cultural and security point of view, the implications are different. Integration policies should be enacted to ease the absorption of the immigrant community in the destination country.
Finally, our analysis of migration policy and outcomes suggests that, in the migration policy arena, complementarities that work through interest groups dynamics are a force that pushes the economy towards the most desirable outcome, rather than bringing about additional distortions in international factor flows.
Anderson K. and L. Alan Winters (2008) “Now is the time to reduce international trade and migration barriers” VoxEU, April 21.
Borjas, G. J. (1999). “The Economic Analysis of Immigration.” Chapter 28 in Handbook of Labor Economics, eds. O. Ashenfelter and D. Card. Amsterdam: North-Holland, pp 1687-1760.
Facchini G. and A.M. Mayda (2008) “From individual attitudes towards migrants to migration policy outcomes: Theory and evidence” CEPR DP 6835, forthcoming in Economic Policy
Facchini G., A.M. Mayda and P. Mishra (2007). “Do Interest Groups Affect Immigration?” IZA WP 3183
Freeman R. (2006) “People flows in globalization” Journal of Economic Perspectives 20:145-170.
Goldin I.A. and K. Reinert (2006) Globalization for Development Palgrave MacMillan and World Bank.
Pritchett, L. (2006) “The future of migration: Accommodating irresistible forces and immovable ideas”, mimeo, JFK School of Government, Harvard University
World Bank (2006) Global Economic Prospects, Washington, D.C.
1 We would like to thank Giorgio Barba Navaretti for useful comments.