Migration & Mobility

Patt, A., et al., 2017. International Emigrant Selection on Occupational Skills.Abstract
We present the first evidence that international emigrant selection on education and earnings materializes through occupational skills. Combining novel data from a representative Mexican task survey with rich individual-level worker data, we find that Mexican migrants to the United States have higher manual skills and lower cognitive skills than non-migrants. Conditional on occupational skills, education and earnings no longer predict migration decisions. Differential labor-market returns to occupational skills explain the observed selection pattern and significantly outperform previously used returns-to-skills measures in predicting migration. Results are persistent over time and hold within narrowly defined regional, sectoral, and occupational labor markets.

Unique Research Study Identifies Benefits of ‘Return Migration’ for Native Workers

March 31, 2017

Doug Gavel - HKS News

Large influxes of migrants into foreign labor forces can often harm the fortunes of native workers, particularly those in low-skilled positions. A 2015 study, for instance, documented the wage losses suffered by native-born Americans in Miami as a result of the Mariel boatlift in 1980, during which as many as 125,000 Cubans immigrated to south Florida. But a new research study focusing on an entirely different set of migrants during a more recent period suggests there may be benefits to local workers when previous migrants return to work at home.... Read more about Unique Research Study Identifies Benefits of ‘Return Migration’ for Native Workers

Hausmann, R. & Nedelkoska, L., 2017. Welcome Home in a Crisis: Effects of Return Migration on the Non-migrants' Wages and Employment.Abstract

The recent economic depression in Greece hit the population of Albanian migrants in Greece particularly hard, spurring a wave of return migration which increased the Albanian labor force by 5 percent in less than four years, between 2011 and 2014. We study how this return migration affected the employment chances and earnings of Albanians who never migrated. We find positive effects on the wages of low-skilled non-migrants and overall positive effects on employment. The gains partially offset the sharp drop in remittances in the observed period. An important part of the employment gains are concentrated in the agricultural sector, where most return migrants engage in self-employment and entrepreneurship. Businesses run by return migrants seem to pull Albanians from non-participation, unemployment and subsistence agriculture into commercial agriculture. 

Hausmann, R., Obach, J. & Santos, M.A., 2016. Special Economic Zones in Panama: Technology Spillovers from a Labor Market Perspective.Abstract

Special Economic Zones (SEZ) have played an important role in Panama's successful growth story over the previous decade. SEZ have attracted local and foreign investment by leveraging a business-friendly environment of low transaction costs, and created many stable, well-paid jobs for Panamanians. Beyond that, SEZ shall be assessed as place-based policy by their capacity to boost structural transformations, namely attracting new skills and more complex know-how not to be found in the domestic economy.

The aim of this paper is to evaluate the three largest SEZ in Panama:

  • Colon Free Zone
  • Panama-Pacific
  • City of Knowledge

Our results suggest that SEZ have been successful as measured by static indicators, such as foreign investment, job creation and productivity. We also find that SEZ have boosted inflows of high-skill immigrants, who are most likely generating positive knowledge spillovers on Panamanians productivity and wages. However, significant legal instruments and institutional designs are preventing Panama from taking full advantage of the skill variety hosted at the SEZ. Complex immigration processes inhibiting foreigners from transitioning out of the SEZ, a long list of restricted professions and even citizenships considered as a national security concern, are hindering the flow of knowledge, keeping the benefits coming from more complex multinational companies locked inside the gates of SEZ.

Originally published October 2016. Revised May 2017.

Neffke, F., Otto, A. & Weyh, A., 2016. Inter-industry Labor Flows.Abstract

Labor flows across industries reallocate resources and diffuse knowledge among economic activities. However, surprisingly little is known about the structure of such inter-industry flows. How freely do workers switch jobs among industries? Between which pairs of industries do we observe such switches? Do different types of workers have different transition matrices? Do these matrices change over time?

Using German social security data, we generate stylized facts about inter-industry labor mobility and explore its consequences. We find that workers switch industries along tight paths that link industries in a sparse network. This labor-flow network is relatively stable over time, similar for workers in different occupations and wage categories and independent of whether workers move locally or over larger distances. When using these networks to construct inter-industry relatedness measures they prove better predictors of local industry growth rates than co-location or input-based alternatives. However, because industries that exchange much labor typically do not have correlated growth paths, the sparseness of the labor-flow network does not necessarily prevent a smooth reallocation of workers from shrinking to growing industries. To facilitate future research, the inter-industry relatedness matrices we develop are made available as an online appendix to this paper.

Neffke, F., Otto, A. & Hidalgo, C., 2016. The Mobility of Displaced Workers: How the Local Industry Mix Affects Job Search Strategies.Abstract

Establishment closures leave many workers unemployed. Based on employment histories of 20 million German workers, we find that workers often cope with their displacement by moving to different regions and industries. However, which of these coping strategies is chosen depends on the local industry mix. A large local presence of predisplacement or related industries strongly reduces the rate at which workers leave the region. Moreover, our findings suggest that a large local presence of the predisplacement industry induces workers to shift search efforts toward this industry, reducing the spatial scope of search for jobs in alternative industries and vice versa.

GEM16: How Individuals & Societies Learn

GEM16: How Individuals & Societies Learn

June 3, 2016

Harvard’s Center for International Development (CID) hosted its annual Global Empowerment Meeting (GEM) on April 13th and 14th, 2016. This year’s event was made possible in collaboration with the MasterCard Foundation. In its eighth year, GEM continues to feature cutting-edge research and initiatives in global development and bring together business leaders, policymakers and academics to discuss ideas that revolutionize development paradigms. This year’s theme was on learning—how individuals and societies learn and the vast socio-economic implications of this process.


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Mobility of Workers Key for Diffusion of Industries

March 18, 2016

Diversification is critical to a country’s long term economic growth plan, especially as many older industries shrink in a world of globalization and rapid technological evolution. But establishing new industries in a region requires access to workers with the right skills and know-how. By definition, local workers lack experience in these new industries. So how do “pioneer” plants, the plants that are the first of their kind in a region, overcome this difficulty? Do they train locals or hire experienced workers from elsewhere? New research at the Center for International Development (CID) at Harvard University finds that pioneers are much more likely than other plants to hire their better-paid, higher-skilled workers from outside the region, lending evidence that mobility of workers is crucial for new industries to diffuse.... Read more about Mobility of Workers Key for Diffusion of Industries

Clemens, M., Montenegro, C. & Pritchett, L., 2016. Bounding the Price Equivalent of Migration Barriers.Abstract

Large international differences in the price of labor can be sustained by differences between workers, or by natural and policy barriers to worker mobility. We use migrant selection theory and evidence to place lower bounds on the ad valorem equivalent of labor mobility barriers to the United States, with unique nationally-representative microdata on both U.S. immigrant workers and workers in their 42 home countries. The average price equivalent of migration barriers in this setting, for low-skill males, is greater than $13,700 per worker per year. Natural and policy barriers may each create annual global losses of trillions of dollars.

Clemens, M. & Pritchett, L., 2016. The New Economic Case for Migration Restrictions: An Assessment.Abstract

For decades, migration economics has stressed the effects of migration restrictions on income distribution in the host country. Recently the literature has taken a new direction by estimating the costs of migration restrictions to global economic efficiency. In contrast, a new strand of research posits that migration restrictions could be not only desirably redistributive, but in fact globally efficient. This is the new economic case for migration restrictions. The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity (“A” or Total Factor Productivity) to rich countries—offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places. We provide a novel assessment, proposing a simple model of dynamically efficient migration under productivity transmission and calibrating it with new macro and micro data. In this model, the case for efficiency-enhancing migration barriers rests on three parameters: transmission, the degree to which origin-country total factor productivity is embodied in migrants; assimilation, the degree to which migrants’ productivity determinants become like natives’ over time in the host country; and congestion, the degree to which transmission and assimilation change at higher migrant stocks. On current evidence about the magnitudes of these parameters, dynamically efficient policy would not imply open borders but would imply relaxations on current restrictions. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.

Orozco, M., 2015. The Demand for and Supply of Nostalgic Products among the Albanian-Americans: A Survey,Abstract

The U.S. is home to more than 200,000 ethnic Albanians, about half of whom are emigrants from the Republic of Albania. Despite the significant Albanian population in the U.S., official trade of Albanian goods in the U.S. almost does not exist.

We surveyed about 200 Albanian-Americans and several stores offering goods imported from the Balkan region of Europe in three U.S. metropolitan areas with large Albanian population in order to study their purchasing habits. We found that the willingness to purchase products from the region of origin is certainly not matched by an adequate supply. The stores which offer such products are few, often hard to reach and offer limited supplies of a small variety of commodities. In the study, we recommend steps to strengthen the market for nostalgic good through continued market research, trade-related technical assistance, diaspora-donor partnerships for nostalgic trade development and trade fairs.

Coscia, M., Neffke, F. & Lora, E., 2015. Report on the Poblacion Flotante of Bogota.Abstract

In this document we describe the size of the Poblacion Flotante of
Bogota (D.C.). The Poblacion Flotante is composed by people who live
outside Bogota (D.C.), but who rely on the city for performing their job.
We estimate the Poblacion Flotante impact relying on a new data source
provided by telecommunications operators in Colombia, which enables us
to estimate how many people commute daily from every municipality of
Colombia to a specic area of Bogota (D.C.). We estimate that the size of
the Poblacion Flotante could represent a 5.4% increase of Bogota (D.C.)'s
population. During weekdays, the commuters tend to visit the city center

Hausmann, R. & Neffke, F., 2016. The Workforce of Pioneer Plants.Abstract

Is labor mobility important in technological diffusion? We address this question by asking how plants assemble their workforce if they are industry pioneers in a location. By definition, these plants cannot hire local workers with industry experience. Using German social-security data, we find that such plants recruit workers from related industries from more distant regions and local workers from less-related industries. We also show that pioneers leverage a low-cost advantage in unskilled labor to compete with plants that are located in areas where the industry is more prevalent. Finally, whereas research on German reunification has often focused on the effects of east-west migration, we show that the opposite migration facilitated the industrial diversification of eastern Germany by giving access to experienced workers from western Germany.

Uncovering New Insights For How Business ‘Know-How’ Impacts Economic Growth

Uncovering New Insights For How Business ‘Know-How’ Impacts Economic Growth

January 20, 2016

MasterCard data helps reveal how ‘know-how’ moves around the world

Cambridge, MA
– A unique research collaboration between the Center for International Development (CID) at Harvard University and the MasterCard Center for Inclusive Growth is uncovering new insights on the dynamics of global business travel and its impact on economies. Through the first-ever...

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