NCPA - National Center for Policy Analysis

Globalizing Labor Markets

January 22, 2004

Economists say that the limited migration of skilled and unskilled workers can spur economic growth in developed and developing nations. Among the actual and potential benefits of migrant labor:

  • The average increase in annual wages for unskilled migrant laborers in 1996 over what they made in their home countries was $7,400, according to preliminary results of a survey by Mark Rosenzweig of the Kennedy School of Government at Harvard University; it was much higher for skilled labor.
  • Also, one fourth of the workers sent ample sums home; but Rosenzweig points out that such remittances are most productive when the home economy can invest them usefully.
  • Workers who return home after a few years are often agents of change when they return says Jagdish N. Bhagwati of Columbia University, even if they are unskilled, because they bring back new attitudes, financial resources and knowledge.
  • If the developed nations in the Organization for Economic Cooperation and Development increased their quotas of skilled and unskilled migrant labor by 3 percent, world income would rise $156 billion a year or 0.6 percent of total world income, according to L. Alan Winters of the University of Sussex.

Globalization has led to greater to labor mobility, and the bigger the differences in wages for similar work across the world, the greater the potential rise in incomes to the receiving and sending nations. It is analogous to the benefits from international trade when goods are cheaper in one country than another.

Source: Jeff Madrick (Challenge Magazine), "Immigrant-Labor Economics," Economic Scene, New York Times, January 22, 2004.


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