Most people guess too high

Surveys in rich countries find people overestimate the share of migrants around them, usually by more than a factor of two.

Three words to keep straight

Where migrants live

Figure 1

Mexico looks untouched

Who gains and who loses

Figure 2

What that graph cannot show

• Net migration is arrivals minus departures
• A country can send many people abroad and still gain people overall
• So we cannot read emigration off it

So what?

• Migration is small globally, concentrated locally
• One map only shows the countries people arrive in
• A country can be shaped by migration without receiving anyone

The wage gap is enormous

The same worker, doing the same job, earns several times more in a rich country than in a poor one.

What stops them

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  A["Wage gap<br/>abroad"] --> D{"Decide"}
  B["Cost of<br/>travel"] --> D
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Why the poorest often cannot leave

• Moving costs money: transport, documents, months without earnings
• The very poorest cannot pay those costs
• So emigration is low in the poorest countries

Emigration peaks in the middle

Figure 4

The hump, in medians

What lifts the rising half

• Being able to pay — the mechanism in the village exercise
• Who is in the population — more schooling means more people with portable skills
• Networks — each cohort abroad makes the next trip cheaper and safer

Why migration clusters

• The first migrant faces the highest cost and the greatest risk
• The second follows a known route, to a known contact
• Each arrival lowers the cost for the next

Exercise 1 — Who gets to leave?

One village. The same job in the United States pays any of them 250,000 pesos a year. Getting there costs 100,000 pesos, all of it paid before you leave — and in this village that is the only way north.

1. Who leaves?    2. A new road and a cheaper bus halve the cost, to 50,000. Whose answer changes?

Exercise 1 — Responses

▶ The cheapest ticket

The poorest cannot leave. Or can they?

We have just concluded that Ana stays: the trip costs more than she has, at either price.

Dunia’s family has almost nothing — and they are already a thousand miles into the journey.

1. Does the video contradict the exercise?

2. If you cannot pay in money, what do you pay in instead?

What the model leaves out

So what?

• Wage gaps create the incentive; costs decide who can act
• Development first raises emigration, then lowers it
• Networks make migration self-reinforcing once it starts

• Costs shape how people move, not only whether they move :::

Remittances: the second map

Figure 5

Almost the opposite map

• Map 1 was dark in the Gulf, North America, Australia
• Map 2 is dark in Central America, the Caucasus, West Africa
• Same phenomenon, seen from each end

Mexico, 1990 to 2023

Figure 6

What that money does

• It goes to households, not governments
• It often rises when the household back home is hit by a shock
• It is more stable than foreign investment during crises

The other side of the money

Remember who leaves: rarely the poorest. Leaving costs money.

• So remittances tend to reach the households that could cover the trip — by saving, or through a relative already abroad
• Where that holds, they can widen the gap inside a village rather than close it
• Where networks reach further down, they can narrow it

Is more leaving a problem?

DEBATE: Make the journey cheap and safe, and more people will go. Is that a failure?

FOR: Sending countries lose working-age people they paid to raise and educate.

AGAINST: Those who leave are far better off, and what they send home dwarfs all foreign aid.

So what?

• Migration binds two economies together, not one
• The receiving country gains workers; the sending country gains income
• Neither map alone describes what happened

The question everyone asks

Do migrants lower wages for workers already there?

Why the simple theory can fail

“More workers, same jobs” assumes the jobs stay the same. Three reasons they do not:

• Arrivals are not copies of the people already there. Different skills complement rather than replace, and natives move into the work where they hold the advantage
• Arrivals are also customers. They rent, eat and buy, raising the demand for labour as well as the supply of it
• Firms react. Where workers are easier to find, businesses expand and new ones open

A natural experiment

• April 1980: Cuba briefly allowed emigration from the port of Mariel
• About 125,000 people left for Florida in six months
• Miami’s labour force grew roughly 7% almost overnight
• Miami’s labour supply jumped for reasons unrelated to Miami’s economy

Mariel, 1980

Cuban refugees arriving in Florida during the Mariel boatlift, 1980. Source: Wikimedia Commons, public domain.

Two economists, one event

• Card (1990): Miami against four similar cities → no measurable effect on wages
• Borjas (2017): only non-Hispanic men, 25–59, without a high-school diploma → a large fall
• Peri & Yasenov (2019); Clemens & Hunt (2019): same data, re-examined → the fall does not survive

Why they disagree

One event, two designs:

What we can say

• Average effects on wages are small in most studies
• Effects concentrate on workers most similar to arrivals
• The answer depends heavily on how you define the comparison group

Exercise 2 — Design the test

125,000 people arrive in Miami in four months, and wages change. Did they cause it? You need a second city — one that shows what Miami would have done anyway.

1. Which city would you use? What goes wrong with it?

2. Whose wages would you look at — and what would that choice let you say? all workers · no high-school diploma · construction workers · Cubans already in Miami

Exercise 2 — Responses

The city. Card used four averaged together — Atlanta, Houston, Los Angeles, Tampa — so no single city’s quirks decide the answer.

The workers. There is no single right answer here — each choice answers a different question.

Takeaways

1. Migration is 3.7% of humanity, very unevenly placed
2. Development raises emigration before it lowers it
3. Networks make migration self-reinforcing
4. Remittances bind sending and receiving economies together
5. Wage effects are small on average, contested at the margins