The case for temporary cross-country migration

I had made the case for internal labor mobility, especially from rural to urban areas, in an article here. In an earlier post, I had pointed to a study by Michael Clemens, Claudio Montenegro and Lant Pritchett that coss-border migration to the US is the most effective anti-poverty strategy for the people of developing economies. So much so that Lant Pritchett has estimated annual gains of about $300 billion — three times the benefit of removing the remaining barriers to trade - and therefore recommended the creation of 3 million jobs for guest workers in the US.

Now Amol Agarwal points to a World Bank evaluation study by David McKenzie and John Gibson on New Zealand's Recognised Seasonal Employer (RSE) program. It was launched in 2007 with the explicit goal of promotion of development in the Pacific Islands alongside benefiting employers at home. The multi-year evaluation study reveals that the program has largely achieved its goals. The study writes,

"Participating in the RSE has raised incomes in both Tonga and Vanuatu, allowed households to accumulate more assets, increased subjective standards of living, and, additionally in Tonga improved child school attendance for older children. Communities also seem to have received modest benefits in terms of monetary contributions from workers, with community leaders overwhelmingly viewing the policy as having an overall positive impact. These results make this seasonal migration program one of the most effective development interventions for which rigorous evaluations are available."

At a theoretical level, economists have long suggested guest worker programs and temporary migrations are among the most cost-effective of poverty eradication interventions. The complementarities in the aging populations of developed economies and the youthful ones in emerging economies provide mutually beneficial opportunities. But there lies several formidable obstacles in the achievement of free labor mobility, especially of those categories of labor which are most beneficial to the supplying countries.

For a start, unlike capital, labor mobility evokes immediate and intense socio-political (xenophobia) and economic ("stealing our jobs") reactions. This is likely to be amplified as long as economic conditions in developed economies remain weak. The difficulty of administering guest worker or temporary labor programs is another major stumbling block in its more widespread adoption. How can over-stay be eliminated?

The RSE program has been successful in avoiding the problem of over-staying. But managing such programs between New Zealand and small Pacific Islands is nothing compared to the infintely more complex task of doing the same between say, Nigeria and USA. Despite the severe punishments meted out to illegal migrants and those over-staying, tens of thousands of migrants from the sub-continent and East Asia continue to over-stay in the Gulf countries. A long period of close economic and political integration between economies is the only way to sustainably break down the institutional restrictions on labor mobility.

The authors acknowledge that the gains from such seasonal migration are much less compared to that from permanent international migration. They therefore point to the big question of whether seasonal migration can or cannot eventually open up avenues for permanent migration.