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Home arrow Political science arrow Development Centre Studies Tackling the Policy Challenges of Migration : Regulation, Integration, Development.

The political economy of migration regulation

The non-existence of a World Migration Organisation9 and the restrictive nature of migration policies are closely connected. Countries of immigration are loath to jettison even a small part of their sovereignty as the benefits of co-operation appear to be diffuse.

To co-operate or not to co-operate? A problem of asymmetry

The main reason for the difficulty in co-operating on migration is linked to the asymmetry of benefits between industrialised and developing countries. While trade is mainly driven by comparative advantage, migration is based on absolute advantage (Hatton, 2007).10 In other words, firms in rich countries have a clear interest in importing foreign labour to reduce costs, while workers, who have to face such competition, are not interested in moving to poorer countries.

In this respect, Figure 2.1 shows the differences in income between the top ten countries of immigration in the North and their respective top country of origin in the South. It illustrates the asymmetry of benefits between workers from high-wage countries and those from low-wage countries. It is a matter of fact that the income per capita in the United Kingdom is almost 1 000% higher than in India, and more than 600% higher in Spain than in Morocco. This implies that by moving to India or to Morocco, workers from the UK and Spain would suffer on average an income loss of 91% and 86%, respectively. US workers moving to Mexico would lose "only" 69% of their income, on average.

The result of this asymmetry problem is twofold. At the national level, there are virtually no organised interest groups in industrialised countries willing to fight to gain access to foreign labour markets, contrary to exporters who can clearly identify an interest in accessing foreign markets. At the international level, migration-related negotiations lack an overarching common goal, namely the free movement of people. Industrialised countries do not want to commit to objectives they consider at odds with their interests, above all politically.

Moreover, countries are more likely to diverge on ideal principles of migration (and free movement) than on trade and capital. Immigrants, unlike capital goods, come with their own preferences and cultures (Gordon, 2010). It is the case that public opinion in most countries of immigration - not to say all - does not view the arrival of foreign workers favourably, and negative attitudes seem to harden as the share of immigrants in the population increases (Dustmann and Preston, 2001; Hatton, 2007).

Figure 2.1. Income gap in main South-North migration corridors, 2009

(current USD, PPP)

Notes: The income gap is the difference between the income per capita in countries of destination and origin. Figures represent the percentage difference of the income between countries in the South and in the North.

Source: Authors' calculations based on World Development Indicators, World Bank.

The reasons are both economic and non-economic. Two non-economic issues particularly worry citizens in host countries: security and national identity. The proliferation of terrorism over the last decade11 has made Western countries more vulnerable to external threats and has led public opinion increasingly to associate immigration with insecurity. In parallel, there has been growing concern regarding the integration of immigrants, or lack of it, as illustrated by the controversy that arose in the United States following Huntington (2004)'s assertion that "the persistent inflow of Hispanic immigrants threatens to divide the United States into two peoples, two cultures, and two languages". Similarly, political leaders in Canada, Germany and the United Kingdom have recently challenged multiculturalism in their countries, while the debate on national identity in France eventually crystallised anti-immigrant opinions.

However, economic determinants seem to prevail over cultural and political factors, at least for labour market participants.12 Using a survey on public attitudes, Mayda (2006) argues that, even though xenophobic feelings manifest themselves in anti-immigration preferences, labour market explanations of attitudes toward foreigners are not altered by non-economic variables. Native workers tend to indeed consider immigrants with similar skills as direct competitors in the labour market. Therefore, skilled individuals favour immigration when foreign workers are mostly unskilled, and oppose it as the skill composition of immigrants increases. Similarly, Benhabib (1996) shows that in equilibrium there is less immigration in more unequal countries because of its effect on the capital-labour ratio.

Hatton (2007) and O'Rourke and Sinnot (2006) show that while the interaction between education and gross domestic product (GDP) per capita is negative, the interaction between education and the Gini coefficient of household income is positive. In other words, the scarcity of skills plays a major role in attitudes on immigration. High-skilled workers feel less threatened by foreign competition in high-income than in low-income countries, and also less threatened in more equal than unequal countries. In addition, Boeri (2010) suggests that welfare systems affect the skill composition of immigrants: higher social spending comes with a lower skill content of immigration. The poorest, the unemployed and the least educated individuals are the most concerned by the fiscal implications of immigration, and they probably consider immigrants as direct competitors for social benefits.

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