Why americanize your name?

Why do immigrants americanize their name? Evidently, they feel that this will help them integrate into the host society and bring them some advantages. It is well documented that the more integrated an immigrant is, or the more alike to a native she is, the more likely she is to find better jobs, earn higher wages, and feel better.

Costanza Biavaschi, Corrado Giulietti and Zahra Siddique analyze immigrants to the United States from the 1930's and find there can be a mighty pay-off. Those who chose the most common American name got up to 14% higher pay. And I like how they determined linguistic complexity of the names by using Scrabble points from the American version of the game.

What kind of jobs are academic scholars looking for?

Any university ranking that is published these days features a majority of US-based schools at the top. It is clear that across every field the United States is able to attract the best talent, at least when looking at top schools. Why is that so? What attracts scholars to the US?

Jürgen Janger and Klaus Nowotny have created an interesting data set by surveying 10,000 academics across the world and letting them choose between various hypothetical jobs. Those jobs varied along a series of characteristics, which allows to understand what academics value most. The results indicate that the standard US tenure track system is pretty much close to optimal. What matters most is pay, which should have a performance component, valuable peers, internal grants and a good mix of teaching and research. Location does not matter much, presumably because academicians are so focused on their work. Those early in their careers value financial and intellectual autonomy, as well as having some prospect for internal promotion based on performance. The more senior ones do not like being bound to a particular research stream and prefer being in a departmental setup rather than a chair-like system. Given all this, it is no surprise that the US manages to attract the best talent. But one can wonder whether the responses also reflect the realization that the United States has attracted the best researchers, so its system must be better independently from personal preferences.

Are immigrant nurses better than domestic ones in the US?

All industrialized economies suffer from a chronic shortage of nurses. Demand for health care is very high, yet nurses are relatively poorly compensated for grueling schedules, important responsibilities and thankless work. It is thus not surprising that the domestic supply of nurses is limited despite major efforts in broadening nursing school opportunities. One has to rely on immigration to fulfill the needs, with potentially the risk of attracting lower quality nurses, as they come from countries with lower human capital and different cultures or traditions.

Patricia Cortés and Jessica Pan study the quality of immigrant nurses and compare them to US native ones using wages and a measure for quality. The half of the nurses migrating to the United States in the last two decades come from the Philippines. They tend to take on harder tasks and tougher schedules (i.e., hospital work), yet they get higher wages than natives even after controlling for education, demographics, location and job characteristics. Non-filipino immigrant nurses fare, however, worse than natives. So is it that Filipinos are that much better? What is certain is that getting educated as a nurse is now done in the Philippines with the explicit goal of emigrating. As green cards for Filipinos are otherwise impossible to obtain (the waiting list is about 40 years long), getting employment sponsorship is essential. I suspect people who would be well qualified for other jobs choose nursing because of the inside track they get for emigration to the US, call that a network effect similar to when entire villages from Italy, Spain or Mexico migrating North for the same occupations, following a few pioneers.

Are international migrants happier after their move?

Why do people migrate? While there may be many motivations, it is very clear that migrants find much better material well-being in their new location. But they have to live away from their roots and traditions, and it is not clear their subjective well-being is better in the new location. Actually establishing this is very difficult, because migrants self-select themselves into migration. To do this properly, one would need a randomized experiment.

Steven Stillman, John Gibson, David McKenzie and Halahingano Rohorua have found this experiment with a migration lottery for Tongans interested in moving to New Zealand. The authors were able to interview both successful, unsuccessful and ineligible households one and four years after the lottery. They confirm that material well-being increases, but the matter of satisfaction is much more difficult to parse. Mental health is better, happiness lower. Interestingly, the study finds contradicting results when comparing recollection of welfare and static assessments. Despite this great dataset, we now only know better that we do not know.

Why are seasonal immigrant worker programs so unpopular?

Immigration policy is difficult to optimize, first because some economic rents are at stake, second because people do not want to share the luck of being born in the right place and at the right moment with foreigners who do not have that luck. But even within that context, a policy of seasonal immigration should be easy to adopt, as everybody wins: immigrants are let in only when labor demand is very high and cannot be met by locals, and the immigrants leave when the labor demand is back to normal. And the immigrants are willing to go for it, as it provides good income that is valued as they return home. This is a winning proposition for everyone, yet such policies are rare, and when they exist, they are little used. Why?

Danielle Hay and Stephen Howes take the example of Australia, where such a policy has been adopted for the horticulture industry but little used. It appears growers are reluctant to hire seasonals even when they have trouble finding workers. Either they are unaware, or they are afraid of red tape, or they prefer to hire back-packers (illegals) who show up on their doorstep. So it appears that once more, the fact that illegals can be exploited runs counter to good policy. Again, I appeal that we should give give each worker, legal or not, the same rights. Another win-win proposition.

On the advantages of hiring undocumented workers

There is a long standing debate in the United States about undocumented workers, and a more recent one in Europe as well. The debate is on two fronts: the public services they receive without paying taxes (in most cases), and the jobs they take away from local and the resulting pressure on local wages. In the second case, an easy solution would be for firms to stop hiring undocumented workers. But the incentives are not aligned for that, unless one puts prohibitive fines on firms doing illegal hiring.

Indeed, David Brown, Julie Hotchkiss and Myriam Quispe-Agnoli find, using administrative data from Georgia, that such firms have a competitive advantage over those the do not hire undocumented workers, or fewer. This advantage translates into a much higher survival rate, especially for little diversified firms requiring low-skilled workers. This looks like a prisoner's dilemma: if your competitor hires illegals, you have to as well, and vice-versa. But you would both be better off without, as there are legal ramifications.

Maybe those legal ramifications need to be trumped up. Indeed, the advantage of hiring illegals is often that they are willing to undercut minimum wages or various benefits legal workers have rights to. One way to avoid this this is to give illegal workers the same rights as legal workers, as I have argued before. This is actually in the interest of documented workers, as there is then less demand for undocumented workers.

The Econophysics of migration

Sorry to report a second time in the same week about Econophysics (previous one here), but this paper is just too bizarre for me not to mention it. Physicists have the reputation, maybe wrongly, to be very bright, methodical and keen on logic. Hence it surprises me very much when I see this papers were completely senseless arguments are made and empirical evidence is tortured in utmost comical ways. I sincerely hope only the worst physicists make it to Econophysics and my view of the profession is thus biased.

Today's paper is by Anca Gheorghiu and Ion Spanulescu. It starts with a paragraph that has nothing to do with the topic, migration, that should from the onset get a failing grade from any teacher beyond elementary school:

Physics, is the most suitable for modelling the economic phenomena and structures or financial-banking operations, because it takes into consideration the process variables characteristics and permits to use some procedures – including the mathematical one – especially probability theory for minimizing or eliminating such influences depending on human factor and unexpected phenomena also, which cannot be predicted by direct methods.

I think was is meant here is that physics bring statistics to the table when analyzing economic phenomena. Color me shocked. After some generic rambling about what causes migration, the authors come up with an "improved model" (their words) for migration: the net present value of migrating equals the benefits of migrating less the costs of migrating. We are making significant progress here.

But there is more. Gheorghiu and Spanulescu then think of various countries as attractors, and that various forces pull people towards the respective countries. This is of course the well-known gravitational model of migration. Hey, we are using Physics concepts in Economics already! Of course, these economic attractors must be defined, and they come up with gold reserves, computers per capita and the proportion of Internet users. Why is a bit a mystery to me. The empirical evidence is presented in the form of histograms, which are apparently at the forefront of statistical techniques.

For some reason, the authors then compare countries to positive and negative electric charges and try to somehow fit migration into the Coulomb's law of electrostatic interaction. I was hoping the electro-magnetic properties of gold, the use of electrons in computers and the Internet would justify the previous empirical analysis, but no, it is entirely forgotten. Indeed, there is no attempt to somehow link all this to any measurement.

I have already spent too much time on this.

Why India should let engineers and doctors emigrate

One of the great frustrations of developing economies is that they spend scarce resources follow everyone's advice by educating their brightest citizens only to see them leave the country for greener pastures. And those pastures are mostly developed economies, where immigrants from the third world are often better educated than the locals. Is it still worth it to push higher education in developing economies?

Yes, would say Oded Stark and Roman Zakharenko. They base this on a simple two sector growth model. One sector, the "engineers," is productive to the point of exerting a positive externality on total factor productivity. The other, the "lawyers," does not. Workers can choose how much education to get and which career to pursue. Once you allow emigration, the general level of human capital increases, as the prospects of a foreign standard of living is a strong incentive to stay longer in school. The interesting part is that everyone is better off: engineers are better and lawyers are fewer. And such a result is not just abstract theory. I reported before on empirical examples of beneficial brain drain, for example in Fiji or Finland.

The fall of internal migration

It is costly to move, and those costs vary by culture and economic circumstances. International migration is of course hampered by immigrations laws and cultural barriers. But in most countries, internal migration is free and only restrained by costs and some degree of local attachment. In this respect, Americans are considered to be the most mobile, as they are very willing to drop everything to pursue better opportunities while the housing market is, usually, very fluid. In fact, the perception is that this mobility has even increased in the US and that it has been hampered only in the last few years, due to the current difficulties in selling homes.

Raven Molloy, Christopher Smith and Abigail Wozniak take a close look at the data and dispel some of those perceptions as myths. In fact, US internal migration has been in a steady decline for thirty years, a decline that in apparent whichever way you look at the data: by socioeconomic household characteristics and distance moved. And this has change little with the current crisis, probably because the additional incentive to move (as there is substantial evidence that some structural mismatch, including a geographic mismatch, has increased the unemployment rate recently) has been roughly compensated by the poor saleability of homes. Still, internal migration rates are still higher than almost everywhere else.

Aid and remittances as hedges against food price shocks

Food is a substantial part of household expenses in developing economies, and in many of the latter foreign aid and remittances from emigrants provide a substantial part of national income. As world food prices have been subject to large fluctuations lately, causing much grief and even riots, it is natural to ask whether aid and remittances can provide some smoothing against the effects of these fluctuations.

Jean-Louis Combes, Christian Ebeke, Mireille Ntsama Etoundi and Thierry Yogo use a cross-country panel data set to study this question. First, they confirm that food fluctuations have a notable impact on aggregate consumption, especially in the poorest economies. Second they find that aid and remittances do help, and remittances seem to be more efficient at hedging. Indeed, an aid-to-GDP ratio of 29% is theoretically necessary to absorb food price fluctuations, while 9% is sufficient is for remittances. Only Mozambique and Nicaragua satisfy the first, while a few more countries satisfy the second.

Should immigration quotas be traded?

We all want to end world poverty, and a particularly efficient way to do this is to allow the free movement of people. Unfortunately, this often puts a burden on the receiving country, and thus immigration limits are set. But there is clearly a positive externality on the other countries from allowing immigrants in, as long as the others also care about world poverty. This implies that immigration quotas should be set higher.

To make this happen, Jesús Fernández-Huertas Moraga and Hillel Rapoport suggest a system of tradable immigration quotas, that mimics the market for pollution quotas. There is one difference, though, as migrants have preferences on where to go. Thus, there is a global number of migration slots put on the market and countries can trade them, paying for a slot elsewhere if local costs of immigration are particularly high. A central assignment authority attributes migrants to countries following their preferences and a particular assignment scheme.

This market allows to extract the price of immigrants to the host country as well as price the benefit of migration to world social welfare. Unfortunately, it does not appear immune to strategic behavior, as most bilateral assignment problems. But it seems to be a very promising step towards a better world, especially in the light of potentially large migration following climate change.

Are minimum wages attracting immigrants?

Immigrants typically compete on the labor market with the low-skilled domestic labor force. Along with global competition through offshoring, this is probably the main reason why real wages have stagnated or even decreased over the last decades for the least educated. One way to counteract this development is to raise minimum wages, which may, however, have the adverse effect of encouraging even more outsourcing to abroad. There may be more reasons for concern.

Corrado Giuletti shows that increasing minimum wages also attracts more immigrants, which puts even more pressure on the least educated workforce. This is not obvious, as the higher wages could also imply lower job prospects, and thus be discouraging for immigrants. To come to this conclusion, Giuletti uses the Current Population Survey and analyzes the responses to the minimum wage increases in 1996-97 in the United States, which differed substantially by state, and lead to different expectations about future wage increases. Those that had the highest increases saw an immigration inflow four times larger than those with the lowest increases, if one focuses on the low-skilled. No impact is seen for the high-skilled. What the implications are for the domestic low-skilled workers remains to be seen, however.

The international flow of doctorates

With globalization, the trade of goods has considerably increased. But the substitution to international trade, international migration has also increased. While the migration of low-skilled workers draws headlines, the most "globalized" are the high-skilled ones. In particular, those holding doctorates are very mobile and in particular they move frequently.

Laudeline Auriol has analyzed for the OECD the flow of doctorates across its members countries. For examples, across European countries, 15 to 30% of all doctorate holders has moved across a border over the last 10 years. This is a remarkable transformation for Europe, where language and cultural barriers were much much higher a few decades ago.

This high mobility reflects the particular labor market for doctorates. Positions and candidates are very specialized, thus often need to move far to fond a match. This is compounded by the large increase in new doctorates across the OECD: from 140'000 in 1998 to 200'000 in 2006. But this growth has been very uneven, low in Germany, France and the US, very high for some of the poorer OECD countries, and for women. Currently, the US has the most doctorates (340'000) with Germany not far behind, which explains why a professorship there requires a second doctorate (habilitation).

Unemployment rates are low, 2-3%, but it usually takes several years after graduation until a doctorate finds a stable job, and this after graduating at a much higher age than other workers. While this sort of indicates a healthy labor market, it hides considerable heterogeneity. Women and doctorates in humanities face much higher unemployment rates. The latter are much less mobile because their research (and teaching) topic is much more closely related to the local cultural context, and can thus not take advantage of international opportunities like, say. natural scientists. It is then not surprising that in some countries a fifth hold jobs that are not related to their doctorates. There is also considerable uncertainty about job security. For example, post-docs (which include temporary visiting positions) now outnumber full-time faculty at US academic institutions.

Coming back to international mobility, it is remarkable how in most counties over a fifth of doctorate holders are foreign born, over half in Canada. Half of the foreign born doctorates in the US are from Asia, and two-thirds of the graduate students as well. And in the countries that have lower proportions of foreign born considerable share has stayed abroad recently. A truly international workforce.

Employment protection and migration

One big big aspect of resistance to immigration has to do with how immigrant might exploit social safety nets. One of them is employment protection. Thus a natural question is to ask whether emigrants choose to move to countries where jobs are better protected. Theoretically it is not that obvious, as employment protection tends to depress wages, as workers bear the cost of protection, and reduce the probability to find employment, but it could also go the other way if it leads to higher bargaining power for workers.

Rémi Bazillier and Yasser Moullan try to sort this out empirically and come to the conclusion that it is really the protection differential between sending and receiving country that matters: migrants like to enjoy the same kind of protection as at home. This is particularly the case for high-skill workers, the ones you actually want to attract. Finally, Bazillier and Moullan also find that employment protection in receiving countries matters more than in sending countries.

Studying migration with experiments

One of the big difficulties with Economics is that one cannot perform controlled experiments like in the physical sciences. While experiments exist, they all have major drawbacks: they may be of too small a scale (although this does not deter medical research to have ridiculous samples), the stakes in the experiment may not be real-life-relevant, controls are to come by, or results may not be easy to generalize. And the larger the problem, the more difficult it is. Think macro-policy, for example.

So I am surprised to find a paper that reviews the literature on migration experiments. You cannot randomize people on whether they migrate or not, or where to. But, as David McKenzie and Dean Yang point out, visa lotteries are exactly that (and decisions of visa officers seem just as random to me...). But only few of those lotteries have been studied, Natural experiments are more common, but about migration per se, rather its impact. For example, the Asian crisis led sharp and unexpected changes in the value of migrant remittances, which impacted families at home. But, of course, one can have questions about how random the "assignment" is across migrants.

As to field experiments, again it is about the impact of remittances. McKenzie and Yang cite as an example a randomized trial where some migrants had access to a savings account in their home country in their name only. This experiment corroborated that migrants have a much stronger savings motive than their families back home. The survey also mentions a paper I discussed before about seasonal famines and migration in Bangladesh.

These are not the experiments I had first in mind, but an interesting introduction nonetheless.

Immigrants and crime

Immigrants are often held responsible for increased crime rates, or crime in general. As these accusations occur in every country one has to wonder whether people immigrate because they are criminal, yet immigration authorities typically vet criminal records. So are immigrants really more criminally inclined than native populations? A recent paper should help shed some light.

Brian Bell, Stephen Machin and Francesco Fasani look at two recent immigration waves to the United Kingdom and find no difference between natives and immigrants. Specifically, they look at the surge of asylum seekers in the 1990s and the large influx of Eastern Europeans in 2004. They key is that immigrants have different demographic and labor market characteristics than natives. Once you control for this, there is no discernible difference. This means also that providing better work perspectives to immigrants reduces both their crime and victimization rates, as it is the case for locals. In particular, forbidding asylum seekers to hold a job seems counterproductive.

Mafia, education, and emigration

The mafia and similar organization are a tumor on an economy. They divert the effort of people to unproductive activities, they upset the rule of law and discourage entrepreneurship. But it is difficult to actually measure the impact of the mafia, because their is no measurement of its activities.

Nicola Coniglio, Giuseppe Celi and Cosimo Scagliusi use difference in the penetration of the mafia in various towns of Calabria, which they measured themselves, to tease out from the data that mafia presence decreases education and increases emigration. Intuitively this makes sense: why you want to get educated if it is not rewarded, i.e., educated people have more income and are more likely to be business owners and thus have to pay a protection fee to the mafia. The only way to avoid this is to emigrate.

More interesting than the obvious is the size of the effect. The historical presence of the mafia in a town decreases the proportion of high school graduates by two percentage points. This is not negligible, as only about a quarter of the population has such a degree.

Is birthright citizenship any good?

Some countries give citizenship to anybody born on their soil. For others, only the citizenship of parents matters (with various degrees of discrimination against mothers). Whether a kid is citizen or not may matter for his future in the country, in particular how he is integrated in the job market. That seems quite obvious. What about the integration of the parents?

Ciro Avitabile, Irma Clots-Figueras and Paolo Masella take the case of Germany, which recently switched to birthright citizenship. In turns out this change had a positive impact, in that parents tried more to make contact with locals and to use German (as measured by reading German newspapers). The first effect was especially true for parents with less human capital, while the second was stronger for those with more. In other words, once locals are more willing to accept immigrants (by granting their kids citizenship), immigrants return the favor.

How to reduce the brain drain in the medical sector

In developed countries, human resources in health care are very scarce, and medical institutions have been aggressively hiring in developed countries. While this is good for developed economies, this is much worse for developing ones, as human capital is harder to come by. Having your best people leave makes it difficult to justify investment in upper level education. What could then be made to help reduce this medical brain drain?

One proposal is to improve medical infrastructure and thus make working in the medical sector in developing economics more appealing. This can be done through foreign health assistance, that is development aid targeted towards medical facilities. Yasser Moullan says this works remarkably well, especially in less corrupt countries. This implies that the main reason that physicians are moving North is not the pay, but rather the working conditions.

Borrowing constraints and (seasonal) famines

Imagine that local food crops have very strong and predictable seasonal fluctuations. The obvious way to smooth consumption and avoid famines before new crops is to store food. Suppose now that this is for some reason not possible. Then, you should trade food with another region that has countercyclical crops, or at least storable crops. What if even that is not possible? Then it should be seasonal migration that should bring people where there is food. And what if that does not happen? You have the rural northwestern districts of Bangladesh.

Shyamal Chowdhury, Ahmed Mushfiq Mobarak and Gharad Bryan performed there a randomized intervention by giving a monetary incentive for seasonal migration. While this would obviously improve outcomes, they varied the conditions for the payout to see what would work best: cash or credit, mandating group or individual migration, changing group size, imposing destinations, etc. For once a randomized intervention study tackles the efficiency of the intervention, a welcome change.

While seasonal migration in the control group was 13%, it was 40% in the intervention group, a significant difference, and much more efficient than just informing about wage opportunities elsewhere, which only triggers a 2% increase in migration. The fact that these payments have such a large effect highlights that the true problem is the liquidity constraint these people are facing.

That said, all this depends on the size of this cash payout. With a very large payout, it would not be surprising to see a large response. The financial incentive corresponded to US$11.50, or about 4 days worth of wages in the destination regions. That does not seem very high, and one could hope that with the normal improvement of conditions over time, this problem should be relatively easy to overcome.