An optimal global immigration policy would entail 3.2 billion people migrating from poor countries into OECD ones - 16 times as much migration as actually happens.
This is the claim of this new paper (pdf) by Jess Benhabib and Boyan Jovanovic.
This is remarkable because the calculation allows for immigrants imposing a negative externality upon indigenous workers by depressing social capital.
Instead, the result comes because the gains to unskilled workers from third world countries of being able to work in rich countries offsets the losses to rich countries' inhabitants caused by lower social capital - minimum wages in rich countries are far higher than unskilled wages in poor countries.
Restrictions on immigration, calculate Benhabib and Jovanovic, can only be justified if we attach more weight to the welfare of people in rich countries than poor ones.
What's more, if we have a social welfare function which gives equal weight to rich and poor people free migration might be a superior policy to increased foreign aid or direct investment into poor countries. This is because (much) aid doesn't work, and because FDI won't equalize incomes between rich and poor countries if the former's success is due to greater social capital.
Rather than take the 3.2 billion migrants as a hard number, regard this paper as a set of challenges to the anti-migration camp. It asks: how much will immigrants have to weaken social capital for free migration not to be optimal? Why should we attach more weight to our welfare than that of poor foreigners?
If there aren't good answers to these questions, it's vindication of Philippe Legrain's new book.
Well, it's a nice way of looking at the world, but many of the opponents of migration have a reasonably self-consistent view. That is to say they do think (for example) that it is the function of the British government to value the welfare of people in Britain over that of those in (say) Bangladesh or Eritrea. And indeed, they hew to that view personally as well.
Worse, the polling evidence would suggest that when pushed to the limit, a majority of people think this way. People are generically concerned with well-being in a hierarchy of self/family/clan/region/country/world.
As for the paper, on a quick reading, (emphasis quick, I'm busy today) it's not really that impressive. After all, if you tweak the value of the negative externality, things start to look different. (And they provide no serious justification for the way they use it in my quick reading.) Not to mention that of course the negative externality is borne in a very unequal way throughout the society taking in the immigrants. Hence, this is a long way from proving that it's rational for some (possibly even a majority) to embrace it.
Posted by: Meh | February 05, 2007 at 02:47 PM
"Why should we attach more weight to our welfare than that of poor foreigners?"
Why should we not? No 'poor foreigner' seeking to migrate here gives my welfare any thought. The purpose of our Government is to look after our needs and wants, not those of any foreigner, poor or otherwise.
Posted by: Ian Bennett | February 07, 2007 at 01:08 PM