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Lumifer comments on Open thread, Nov. 17 - Nov. 23, 2014 - Less Wrong
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For context on the size of the potential benefit, an additional 1% migration rate would increase world GDP by about 1% (i.e. about one trillion dollars). The main question is the rate of migration if barriers are partially lowered, with estimates varying between 1% and 30%. Completely open migration could double world output. Based on Table 2 of Clemens (2011)
I am having strong doubts about this number. The paper cited is long on handwaving and seems to be entirely too fond of expressions like "should make economists’ jaws hit their desks" and "there appear to be trillion-dollar bills on the sidewalk". In particular, there is the pervasive assumption that people are fungible so transferring a person from a $5,000 GDP/capita economy to a $50,000 GDP/capita economy immediately nets you $45,000 in additional GDP. I don't think this is true.
This is ridiculous. If this were possible, wouldn't the industries just relocate to the third world? (obviously, yes, some industries are inherently local, but not all industries that can move have moved)
<glances at China> Um....
:-D
Yes, I know about China, but (a) not all industry that could move has (b) China isn't really a third world country.
Not any more it isn't, now that all the industry moved there.
All the industry moved there? And so why hasn't it now moved to the remaining third-world countries?
Not all of it, but a lot of it. My point is that its economy grew as a result.
Industries are moving out of China to cheaper places like Africa and the Philippines. But the real-world economy is not completely frictionless; it takes time for these effects to occur.
Indeed, it takes time, and for a third world person to reach the productivity of a first world person could take maybe 15 years of first-world education at a bare minimum? So people are not perfectly fungible.
I very much doubt your number. Third world people who go to first world universities do fine, so that's 3 years, not 15. And for many jobs - even a very intellectual one like mine - I'm skeptical how much difference a degree really makes.
If immigrants didn't have the skills that were needed to be productive, companies wouldn't want to hire them. Instead we see companies chafing at the H-1B limits and crying out for more immigration.
Any thoughts about what will happen when there are no longer really cheap places to move to?
The robots will take over.
That's not a joke -- industrial automation is proceeding at a rapid clip and the range of jobs for which you want dumb but cheap human labour continues to contract.
Productivity will equalize and then growth will slow. When I'm pessimistic I fear every national economy will look like Japan's as soon as we catch up.
Also, the industries that can move and would benefit already did, so the rest are in particular need of people from developed nations.
The paper cited is handwavy and conversational because it isn't making original claims. It's providing a survey for non-specialists. The table I mentioned is a summary of six other papers.
Some of the studies assume workers in poorer countries are permanently 1/3rd or 1/5th as productive as native workers, so the estimate is based on something more like a person transferred from a $5,000 GDP/capita economy to a $50,000 GDP/capita economy is able to produce $10-15K in value.
It looks to me as providing evidence for a particular point of view it wishes to promote. I am not sure of its... evenhandedness.
I think that social and economic effects of immigration are a complex subject and going about trillions lying on the sidewalk isn't particularly helpful.
Are they advocating for abolition of the minimum wage? Can one survive on 1/5th the average salery? Will the combination of inequality and race cause civil unrest?
Sure, a randomly chosen person in a $5,000 GDP/capita economy is unlikely to make $50,000 no matter where you move them, but no-one is proposing to move people at random.