From Nationals to Naturals: It’s a Natural Way to Think

From Nationals to Naturals: It’s a Natural Way to Think Lant Pritchett International Migration: Challenges and Opportunities in the New Age of Mobility Public Affairs Conference 2008 April 11, 2008

Five Points • The usual structuring of the migration discussion into impacts on “sending” and “receiving” countries is structured to ignore the gains to the movers • Focus instead on income per natural—the income of people born in a given place • The wage gaps across workers are larger than ever in history—and are largely pure discrimination • Given the existing wage gaps there is nothing on the agenda to address gaps in income per natural remotely like allowing labor mobility • The “myth” at the heart of the existing international system will eventually have to be re-thought

The iron grip of place based thinking • Imagine a worker with above average income in a poor country moves to a rich country and makes twice as much but that is a below average wage—and there are no effects on anyone else (and the mover is much happier) • Average wages in the sending country fall • Average wages in the receiving country also fall. • So migration is a bad thing? Because analysis of sending and receiving countries reveals not benefits?

Income per natural • Think of the income per natural, per person of people born in Jamaica, that is, Jamaicans, no matter where they happen to reside • Income per natural is a measure of development of Jamaicans. • One is a place based measure and one is a people based measure

“Guyana” poorer than Paraguay but Guyanese are richer than Brazil

Wages gaps across countries are larger than ever before in history

Wage gaps are largely discrimination paying different wages to workers of equal productivity on either side of the border Annualized wages of equivalent workers—same nationality, education, age, sex, urban residence, sector on either side of the border

Discrimination induced by the US border exceeds any other form of wage discrimination—and rivals the wage impact of slavery Slavery in Virginia, 1840-1860, ratio rental to subsistence: 3.8

Relaxing the discrimination against foreign naturals participation in labor markets produces larger gains than anything else available • For micro-based interventions compare the per person gain to the number of days/weeks of gains from labor mobility • Compare aggregate gains of “reforms” on the world agenda

The total present value of access to a lifetime of micro-credit is the wage difference of 8 weeks work of the same worker in USA versus in Bangladesh Source: Gains estimated from Pitt and Khandker for micro-credit (annual gain of 14 percent of per capita HH consumption, CMP (forthcoming) for wages

Logic of the Pax Americana • Proliferation of sovereigns—with decolonization and end of empires many more states with borders • Free trade in goods promoted • Free trade in capital promoted • No expectation of labor mobility Implicit Myth: Every sovereign state is capable of an adequate standard of living for its naturals within its sovereign borders

Is the myth true? • Population mobility across physical space has been a constant of human history for as long as there has been human history • Within large countries, like the USA, there is massive gross and net labor mobility over time—the emptying out of the rural middle • The borders created by colonialists were not driven by the logic of viable entities • No deep reason from economic theory to suppose this is so Are we sure there are no ghost countries?

The emptying of the heartland (only green shaded counties had substantial populationincrease over a 60 year period)

Massive Internal Mobility: Contiguous regions of the USA are a third their demographic counter-factual size

What I did not say • The usual discussions of “sending country” impacts (remittances, brain drain) are driven by place based thinking • Income per natural is people based thinking that is the natural way to think • We are swimming in an ideology of nationalism—that may or may not continue

Attitudes towards Interracial Marriage in the US 90 80 70 60 50 Percentage of Population 40 Percentage of Population 30 Approving 20 10 0 Year 1991 1978 1997 1968 1958 1972 1983 1994 2003 2002 2004 2007 (June) 2007 (Sept) 1963 MLK’s March on Washington 1992 LA riots spurred by tape of Rodney King beating Barack Obama runs for President of the United States MLK assassinated And social change takes time.. But can be complete

From Nationals to Naturals: It’s a Natural Way to Think