Chapter VI
managing latin american migration better
Latin American Economic Outlook
Jeff Dayton-Johnson
This version: 6 May 2009
A case for public action?
This Outlook appears at a time of great debate surrounding the issue of international migration, and migration from Latin America and the Caribbean in particular. The European Union has in recent years been feeling its way toward a Europe-wide policy regarding immigration: the 2007 return directive for irregular migrants discussed in Chapter I is one facet of this emerging policy structure.[1] At the same time, EU member states have pursued aggressive, and sometimes controversial reforms, including the Spanish assisted-return programme for legal migrants assessed in Chapter III. France, meanwhile, established quantitative targets for the share of economic immigrants among all immigrants, and for expulsions of irregular migrants (some 30 000 a year). The incoming Obama Administration in the United States announced in April 2009 that immigration reform, most recently stalled as recently as 2007 under the preceding administration, would be a policy priority in the new president's first year in office, despite competing priorities such as health care and energy reform, not to mention measures to combat the economic crisis. The Obama Administration signalled its commitment to make legal status possible for the unauthorised population (about which statistics were provided in Chapter II of this Outlook).[2]
This flurry of political activity in the principal destination countries for Latin American and Caribbean migrants --together with the comments of several Latin American leaders reviewed in Chapter I -- demonstrates at least two things. First, there is a widespread conviction that the current international migration regime does not work well. Some kind of reform is needed, and quickly, to make international people flows deliver better outcomes for people in countries of destination and countries of origin, and indeed for migrants themselves. Second, political actors of all stripes and at all levels of political action are convinced that now is the time to act. There is a third element in the current context, however, and that is the absence, or the apparent absence , of a growing consensus on what must be done at this juncture. Not only do the interests of countries of destination and countries of origin sometimes differ, but different parties within each of those groups have different objectives and interests.
Furthermore, the context of the global economic crisis, particularly since the inflexion point marked by the September 2008 collapse of Lehman Brothers, has cast an increasingly sombre shadow over immigrants in OECD countries. Protests against foreign workers in the United Kingdom, dipping into the public coffers to encourage foreign workers in Spain to go home, the presence of armed vigilante groups in the United States along its southern border -- all these phenomena signal an anxiety and an analysis that immigrants cause economic harm. In the area of immigration reform, the "urgency of now" so frequently invoked by President Obama may loom large precisely because of the economic crisis; but it may be instead that reform is needed in spite of the current crisis. In this respect, as in so many others, we must distinguish between phenomena linked to business cycles, and longer term trends. Hostility to immigrant workers may be expected to rise with unemployment (a shorter term phenomenon), while differences in the demographic profile of countries of immigration and emigration -- and the spur they provide to international migration -- will endure in the longer term. Of course, classifying phenomena as short-term or long-term is harder than it looks: as the Macro Overview of this Outlook showed, some of the social and economic outcomes we are observing now are cyclical, and some stem from longer term transformations being wrought by this crisis. Nevertheless, it bears repeating that immigrants are disproportionately feeling the pain of the crisis in many countries. In Spain, for example, the unemployment rate scaled to the dizzying height of 17.4 per cent; but the rate was a staggering 28.4 per cent for foreign-born workers, versus 15.2 per cent for native-born workers.[3] For immigrants in many countries, unemployment is already at heights observed for workers generally during the Great Depression of the 1930s.
One dimension missing from the policy debate surrounding immigration reform in OECD countries is the interest of countries of emigration, including countries in Latin America and the Caribbean. For example, the European Union's "Blue Card" initiative, launched in late 2007 to attract more high-skilled workers to the region, evinced a high level of co-operation and consultation among different ministries and interest groups, but any discussion of the measure's possible exacerbation of brain-drain pressures upon developing countries was notable by its absence. It is the principal message of this year's Outlook that there are important effects upon countries of origin, both of people flows and money flows. Many of these impacts are positive, at least in principle, including the use of remittances to finance physical and human capital investments, the buffering effects of remittances at the macro level, the reduction of pressures on labour markets, the circulation of skills and ideas. Other impacts are not good: the precarious circumstances of people who migrate without papers is perhaps the most obvious example. In the adumbration of policy options open to countries of origin and of destination for migration reform which follows, the interests of developing countries will not be forgotten.
THE WAY FORWARD: THREE OPTIONS
The aim of any meaningful reform of international mobility of people is a new regime of global migration governance. That does not mean that the new governance regime will necessarily be effective, nor that it will be deliberately and coherently constructed. The regime may be profoundly liberal or rigidly dirigiste; it may or may not be equitable. It may involve genuine negotiation among all parties or it may be the fruit of a multiplicity of unilateral actions by countries. The point is that the totality of rules and enforcement efforts undertaken to manage people and money flows constitute a governance system, and many key players in developing countries and industrialised countries alike believe that now is the time to revisit and revise those rules and enforcement efforts. What, in broad brush strokes, might be the contours of a new governance regime? We offer three alternatives.
(1) Open the doors.
The economic gains from international labour mobility are huge and the potential gains from further liberalisation are, if anything, larger still. An early study by Hamilton and Whalley (1984) estimated that eliminating all barriers to international people flows would double world GDP. Subsequent calculations have been slightly less spectacular, but even so, Hatton (2007) summarises this literature as averring that the gains from free people flows are about ten times as large as those from free trade. The foregoing chapters of this Outlook make a strong case indeed that there are gains to all parties. Migrants realise extraordinary income gains relative to remaining at home. Countries of origin gain from remittance inflows and may benefit from increased earnings for low-skilled workers. Countries of destination benefit from increased efficiency in labour markets and increased fiscal revenues to offset the growing burden of ageing populations. To be sure, some parties gain more than others -- notably migrants themselves -- and some groups run the risk of being losers from increased immigration. But surely in the presence of such extraordinary global gains, there exist mechanisms to compensate potential losers from the process.
An open-borders governance regime would rely on accessible, flexible and fully legal access to labour markets in other countries, for which current rules for the majority of citizens of European Union member states provide an excellent example. The "selection" of immigrants would be driven by labour-market opportunities, with family reunification of workers' families playing an equally important role. Existing frameworks to permit the movement of refugees and asylum seekers would continue to govern movements not motivated primarily by labour-market concerns. Further streamlining -- ensuring full pension portability, for example, reducing the cost of remittances and widening the range of cross-border financial products and services for migrants and their families -- would further reduce the costs of mobility and ensure the realisation of the potential gains from larger cross-border people and money flows.
(2) Seal the borders.
The principal argument against the open-borders governance regime for global migration is that seems inconsistent with a broad swath of public opinion and government actions, primarily in countries of destination. British workers engage in wildcat strikes protesting foreign workers; the Spanish government spends considerable sums to encourage migrants to go home; the United States spends even more to build a high-tech wall along its southern border. Some of these examples are measures to address the current economic crisis, but others pre-date the crisis. These are all actions and sentiments expressly at odds with the open-borders way of thinking. What if these policy initiatives laid the groundwork for a global governance regime?
The economic rationale for the sealed-borders world could be quite reasonable. Though the net gains from total liberalisation of people flows could be theoretically quite large, it may be that the possibility of compensating those who stand to lose -- "side payments", in economic parlance -- are in fact difficult to make. In practice, these side payments might involve dramatically reinforced social protection systems for lower skilled workers who might compete with immigrant workers, and the institutional feasibility of this kind of reform would be difficult in many countries . On the side of countries of origin, compensation might involve transfers from industrialised countries to developing countries to offset the losses to the latter from the brain drain of highly skilled people; the magnitude of such transfers would likely be larger than current foreign aid flows.
In addition to the difficulty of compensating losers, there may be considerable uncertainty ex ante regarding just who will be a loser. Indeed, this kind of ex ante "individual specific uncertainty" has been postulated as a potent explanatory factor behind resistance to reform more generally.[4] Low-skilled workers, or earlier waves of immigrants, may strenuously oppose further immigration, even if in fact most of them might gain, given that some of them will lose their jobs or suffer pay cuts, and it is difficult to know ahead of time who those unlucky people will be.
And of course there may be non-economic considerations as well. Strong opposition to immigration might spring from fears that new languages, new religious practices, new social behaviour that migrants bring with them will dilute or transform national culture.
In any case, a sealed-border governance regime will focus its policy attention on patrolling and enforcing points of entry. This emphasis on law-enforcement aspects of migration governance are already an important part of migration policy in the United States, for example, where far-reaching migration reforms in 1986 and 1996 substantially strengthened the capacity for border control; in Europe, the increased resources provided to FRONTEX (the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union), provide another example of this emphasis in recent migration policy making. Whether countries of origin or of transit migration should contribute to these patrolling efforts is a controversial point: should Mexico, for example, attempt to prevent its own citizens -- or Central American transit migrants -- from crossing into the United States illegally? There is a precedent: in 1954, Mexican troops were dispatched to the country's northern border to prevent their compatriots from entering the United States in the absence of a bilateral accord (Alba 2009).
Together with increased and more draconian monitoring and enforcement, a sealed-border regime will be conservative with legal instruments granting access to domestic labour markets. Certain types of international movement not directly related to labour markets -- asylum seekers, refugees and family reunification -- are legally recognised human rights and treaty obligations for most countries and might be difficult to thwart, although enforcement of regulations can become stricter and procedures can be made more difficult. Measures to facilitate and lower the cost of migrants' remittances would not be a policy priority, even if they might not be actively discouraged.
The most immediate problem with the sealed-borders regime is that migration policies are not the only determinant of people flows (although there is strong evidence, reviewed elsewhere in this Outlook, that immigration restrictions do affect the magnitude of flows). In the real world, far from this closed-borders regime, employers in many sectors aggressively seek more immigrant workers to fill gaps in the labour market, and even so cannot always find enough workers. Two examples from the United States illustrate this phenomenon. Firms in the information technology sector regularly lobby the Congress to expand the annual quota on H1-B visas that allow highly-skilled foreigners to work on a temporary basis in the country; Microsoft Chairman Bill Gates even testified to a Senate committee to this effect in 2007. In agriculture, farm owners desperately sought to loosen restrictions on H2-A temporary farm worker visas in late 2007, as crops lay rotting unharvested in the fields.[5] These examples suggest that, in a closed-borders world, there will be unfilled jobs in the short run, and in the longer run, serious structural transformation in the economy (in the examples above, the United States economy might see a reduction in its production of high-tech and agricultural products, either because labour is scarce or becomes more costly).
In addition to unfilled jobs, though, the mismatch of labour supply and labour demand, in the context of large earnings differentials between Latin American and Caribbean countries and countries of destination, clearly indicate that many migrants will seek out these job opportunities without legal authorisation. The evidence on Mexican migration to the United States since 2001 presented in Chapter II raises the possibility that a hardening of the immigration regime might reduce inflows, but also might increase the proportion of inflows that are undocumented. A minority of these migrants seek to cross land or sea borders at great risk to their safety, and with sometimes tragic results. Most irregular migrants in the United States and Europe are visa "over-stayers", people who entered the country legally but remained there illegally or semi-legally. This incentive to migrate under irregular circumstances-- and the associated human tragedies -- could be reduced by dramatically reducing legal means of access to a country (thereby reducing the problem of over-stayers), and if truly massive resources were allocated to enforcement and border control. But the costs would be quite high.