” You go because the cold is coming,spring is coming,soldiers are coming: plague,flood and ice age,a new religion,a new idea.
You go because the world rotates,because the world is changing and you have the lost the key.”
I have been reading ‘Good economics for hard times’ by Abhijit Banerjee and Esther Duflo and it has already built an interesting narrative which has pleasantly led to modification of certain beliefs that I hold as an individual.So far, I have read about the fear that propels among the natives of a place when immigrants(low-skilled and high skilled) migrate to different countries and cities in the search of jobs,better livelihoods and opportunities.They also delve deeper into the political narrative that is being structured around migrants which mostly says that the increase in migration leads to reduction in wages and opportunities for the natives of the place.It’s hard to let go of that narrative as we have been fed for it for so long that it doesn’t even matter that facts state otherwise because of the simplicity of the logic.
Abhijit and Esther debunk that myth through some interesting examples over the course of history. It starts with a beautiful poem by a British Somali poet, Warsan Shire who highlights through the poem that immigrants do not leave their homes until it’s the only choice they have.The influx of immigrants doesn’t happen because they would love to tap into some economic opportunities that the relatively developed cities or countries hold but it more often happen happens due to desperation that has shattered their everyday lives.They give examples of how migration is not always driven by poverty by highlighting examples of the places that people seem most desperate to leave are Iraq,Syria,Guatemala and even Yemen which are far from being the poorest nations in the world.These nations have a relatively higher cost of living as high as 20 times in case of Iraq when compared to that of Liberia and 10 times when compared to that of Mozambique.It’s the cartel wars in the case of Northern Mexico,the horrible military Junta in Guatemala,the wrath of Burmese government in Myanmar, and the civil wars in Middle east that have led to influx of migrants in the developing and developed nations.The book doesn’t fail to include the more ambitious migrants who more often than not contribute effectively to the wealth of the nation.Their percentage as compared to the low skilled immigrants might be less but their contribution to the host country’s growth is higher than imagined.43 percent of the top 500 US companies by revenue were founded by immigrants or the children of immigrants.
The book highlights the fundamental problem with the supply demand analysis mentioned above because it fails to take into account that the influx of of migrants leads to an increase in demand of laborers but at the same time it also increases the supply of laborers.This is why the wages don’t go down.This also brings in to play some other factors which could benefit the host country.
The influx of migrants(low-skilled) leads to them spending on amenities such as restaurants,shopping,daily use amenities which also creates jobs for the natives which otherwise wouldn’t have happened.Their move also enables better roles for the natives since now the low skilled work can now be done by the immigrants at a much lower cost because of the huge supply.The jobs that often created for the natives then help them shift from manual to manual jobs that revolve around communication skills which the immigrants due to the unfamiliarity of the local language wont seem to avail.The competition then doesn’t inherently happen between the immigrants and the natives which we have been so blindly believing that the influx of migrants leads to loss of job opportunities for the natives of the host community.It in-fact leads to creation of more jobs for the low skilled laborers for both the natives and the immigrants,helps in creation of better jobs for the natives because the cost of low-skilled laborers goes down due to increase in supply and in some cases it also helps women enter the professional environment who due to the lack of inexpensive domestic help do not enter the professional realm.This further leads to increase in income for the family and then that leads to increased spending which further creates more jobs which eventually benefits the people as well as the country’s economy.
Figure 1.1 Why migrants do not always lead to lower wages. Source:Good Economics for Hard Times
This is as far as the inter-country migration goes but what about the intra-country migration where people migrate from rural areas to urban areas in the developing nations and from relatively less developed areas to an urbane environment in the case of developed nations.One of the crucial elements that ease migration is the availability of housing and there is always a dearth of affordable housing as well as infrastructure in cities in our country.Even after the launch of Pradhan Mantri Awas Yojana which was essentially launched to address the shortage of affordable housing has under-performed in front of its rural counterpart called PMAY-Grameen. The draconian zoning laws in the country also make it harder to address the increased density on population after migration which leads to the formation of slums.This doesn’t seem that alluring to the people who migrate and often don’t migrate unless it’s absolutely necessary.Even though migration helps in bridging the gap between different economic disparities the lack of proper amenities doesn’t add to the incentives required to move.The fear of plunging into the unknown make people wary of the process of migration which could leave them financially worse off from what they were when they were living in the villages.The concept of loss aversion by Daniel Kahneman and Amos Tversky explains it aptly.
The book pointed out an interesting example which showed that in 1950’s the government of United states,Canada,South Africa and the soviet union were all heavily involved in more or less forced relocation policies.It sounds bizarre when thinking of the current situations where the global stance that countries seem to have taken in to reduce migration.In countries like India and China this was being achieved through banning exports of farm products to reduce the prices according to the affordability of urban consumers.It was to make agriculture less profitable which would them drive out the rural population out of their farms in search of better economic opportunities in the cities.The economic rationale behind this was that the works who move to cities can benefit from various economic opportunities which will help them in coming out of economic adverse situations.This will then lead structural transformation.But could this forced migration also lead to overcrowding and taking a look at the current zoning policies which doesn’t quickly account for increased density lead to state of chaos?The dearth of amenities give rise to inhabitable conditions for them to live in and often during the time of pandemics become the hot-spots for things to go extremely wrong.One of the proposed solutions which has been talked about every now and then is the community land trust which has been implemented in the US and could also work in India.The current state of the daily wage laborers who have migrated back their cities just shows how little they are taken into consideration when any crisis shapes up.
Weekly Musings 