One point this article does not present is the demographic structures of the north and south. While the merits of labor mobility can be debated in a number of ways, the fact of the matter is that there are striking similarities in the dependency ratios (nonworkers to workers) in the north and south but for different reasons. In the north (Western Europe, Russia, Japan) ageing is a serious problem from a structural point of view, while in the south the high percentage of young children contribute to labor abundance.
This mismatch best brought out by the ongoing integration process suggests that labor mobility is an inevitability, no matter what. Obviously as many have suggested (below) rather than have unscrupulous brokers manage the labor flows, they need to be made transparent. All recipient countries need to institutionally prepare themselves for the social and cultural adjustments and I might add progressively. I might also add that David Dollar of the World Bank is in favor of open labor markets, which many governments and labor unions are loathe to consider. There is a chapter on migration and remittances in the recent Global Development Report. This is consistent with the demands some developing countries like India and Brazil are making in opening up the service sectors that would allow the mobility of labor. Not something that the US and others had in mind when they pressured the south in opening up services, namely banking, finance, and insurance. So politically this is going to be an important agenda at the WTO/UN levels down the road. Relatedly, I am working on skilled labor mobility from India to Japan. I will be conducting firm-level surveys in both countries in 2005 and 2006. Japan has a serious demographic problem. Japan is closed (though more open since the 1990 change in immigration policy) to foreigners but already Chinese, Thai, Bangladeshis, some Brazilians work in the construction, entertainment, and other 3-D jobs (dirty, dangerous, etc. also demeaning). The question is how is Japan going to deal with capitalist competition given the neo-liberal environment and the fading away of the postwar MITI-kereitsu system? It is evident it too must be more open to immigrants in a progressive way. It also raises the question of innovative capability. For India tapping the Japanese market and weaning itself away from the US one will be good for the Indian industry in a number of ways. For Japan, if they don't get the bloody Indians the US or Germany will:) But the challenges of the Japanese market are there. So are the challenges of the Indian political economy. cheers, anthony xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Anthony P. D'Costa, Associate Professor Comparative International Development University of Washington Campus Box 358436 1900 Commerce Street Tacoma, WA 98402, USA Phone: (253) 692-4462 Fax : (253) 692-5718 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx On Thu, 22 Jan 2004, Devine, James wrote: > here's a topic for pen-l discussion.... > > New York TIMES/January 22, 2004 > > Immigrant-Labor Economics > > By JEFF MADRICK > > PRESIDENT BUSH'S recent proposal to grant temporary legal status to > illegal immigrants is not yet fleshed out enough to judge how effective > it will be. Six million to eight million illegal workers would qualify, > as would future immigrants hired by companies that could show that > Americans were not willing to take the jobs. > > One especially serious concern is that immigrant workers will be tied > indefinitely to the company that sponsors them. Teresa Ghilarducci, an > economist at Notre Dame, warns that this would give the company undue > power over wages and other worker rights, and a result could be a > permanent class of low-wage employees. > > But if the Bush plan raises more questions than it answers, it is still > an encouraging first step that focuses needed attention on an issue that > will become more urgent in coming years. > > For one thing, there will probably be no stopping the steady march of > unskilled and skilled labor across borders. The United States has been > unable to stanch flows of illegal immigrants from Mexico, for example. > > But economists of varying political views also say that the limited > migration of skilled and unskilled workers, if properly harnessed, can > be a vital source of economic growth in developed and developing > nations. > > "This is the last unexplored frontier of globalization," says Dani > Rodrik, an economist at the Kennedy School of Government at Harvard. "We > have to start taking labor mobility seriously." > > In fact, theoretically, 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. > > A team of British economists led by L. Alan Winters of the University of > Sussex has developed a traditional model to estimate such gains. In > general, the model assumes that developed nations generate higher > profits and more investment as labor costs are saved. They also generate > higher government revenues as the new immigrants pay payroll and income > taxes, as well as sales taxes. As for developing nations, their migrant > workers now make far more money and send a large part of it home. > > Mr. Winters and his colleagues have found that if the Organization for > Economic Cooperation and Development nations increase by 3 percent their > quotas of migrant labor, both skilled and unskilled, world income would > rise by a considerable $156 billion a year, or 0.6 percent of total > world income today. > > But if the theory is convincing, the practical issues are considerable. > Absorbing lower-wage workers in host nations means that domestic wages > are at least somewhat undermined. More immigrants will also put pressure > on already overburdened social programs. As for the sending nations, > they in turn may not receive a fair share of the economic benefits if > workers leave and never return. > > A temporary limited migration program similar in principle but different > in important details to what the Bush administration seems to have in > mind can minimize such problems. By providing migrant workers legal > status, including eligibility for domestic social programs, businesses > could not easily pay wages below the going rate or ignore their payroll > taxes and other benefits, as they now can for illegal immigrants. For > these reasons, some labor unions are beginning to support such > legalization. > > With legal status, the immigrants will also be paying more taxes, > including payroll taxes, to support social programs. In fact, the > migration of young workers to Organization for Economic Cooperation and > Development nations could be an ideal way to pay part of the rising > costs of public pensions, including Social Security in the United > States, as populations age. > > As for benefits to developing nations, preliminary results of an > incomplete survey by Mark Rosenzweig of the Kennedy School and his > colleagues show that earnings increases for migrants over what they made > in their home countries are steep. To give an idea, the average increase > in annual wages for unskilled labor in 1996 was $7,400, and it was much > higher for skilled labor. > > Also, one fourth of the workers sent ample sums home. > > What is critical to the equitable distribution of benefits, however, is > that workers return home after a few years. Cycling workers would allow > more poor workers from a wider range of nations to migrate. Further, > says Jagdish N. Bhagwati of Columbia University, these workers are often > agents of change when they return, even if they are unskilled, because > they bring back new attitudes, financial resources and knowledge. > > But simply requiring workers to return home is not enough. Attractive > incentives must be provided as well, and those in the Bush plan are > inadequate. Devesh Kapur, a professor of government at Harvard, who with > his colleagues has done comprehensive research in the field, suggests > that one possibility is to have the United States retain part of the > wages paid to new legal migrant workers in an investment account that is > given back to the workers only when they return to their home countries. > > > As for the power of businesses over their recruits in the Bush plan, Mr. > Kapur says that employees should be required to work for their > sponsoring company for only a limited time, and then be allowed to look > for other jobs. > > For all its benefits, however, greater labor mobility is no panacea in > itself. In the United States, for example, a Bush-style immigration > program would work best, in my view, in tandem with a reasonable > increase in the minimum wage. As for sending nations, Mr. Rosenzweig > points out that returning money in the form of remittances is most > productive when the economy can adequately channel them to useful > investment and social programs. > > Moreover, some older policies work at cross purposes. Mr. Kapur notes > that one reason so many Mexicans flee to the United States is that the > North American Free Trade Agreement subjected them to low-price American > agricultural competition that is subsidized by the government. > > More labor mobility, then, is an exciting potential source of growth for > all, but it will work only in conjunction with proper safeguards and > fair and productive social policies. > > ------------------------ > Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine >
