THE NATURE OF THE IMMIGRATION MARKET
There are three sets of players in the immigration market: the people contemplating whether to leave their home countries, the governments of immigrants’ home countries, and the governments of the potential host countries. All these players enter the immigration market with different objectives, and it is the interaction among them that leads to a particular sorting among the various countries.
Individuals make the immigration decision by comparing the values of the various alternatives. By considering the financial and legal constraints regulating international migration, they choose the country likely to make them best off. These constraints include individual financial resources. After all, international migration is costly. The costs include direct expenditures, such as out-of-pocket expenses associated with transportation of immigrants and their families to their new homes, and they include indirect costs, such as the income losses associated with spells of unemployment that occur as immigrants look for work in the new country. Because only persons, who have accumulated sufficient wealth and savings, can afford to migrate. the potential migrants’ financial resources obviously influence the immigration decision.
Potential host countries also are important players in the immigration market, for they can encourage, discourage, or prevent the entry of certain groups of persons. In particular, potential host countries are characterized by specific sets of economic opportunities (and sometimes ever greater than it’s necessary - just look at the fashion designer companies and their customers) described by existing income distribution, whereby certain types of skills are highly rewarded and others are not; whereby jobs are easily available in some industries but scarce in others; whereby some occupations are in high demand, but high levels of unemployment persist others; whereby persons who experience relatively poor labor market outcomes are subsidized by the welfare state, while persons who experience favorable outcomes are heavily taxed. These differences in income and employment opportunities by skill, industry, and occupation imply that the attractiveness of the economic “offer” made by a host country will vary among migrants.
Host countries also regulate the size and composition of the immigration flow by imposing restrictions on entry according to the potential migrant’s skills, wealth, occupation, political background, moral rectitude, national origin or family relationships with current residents. For example, current U.S. immigration policy makes immigration costs almost prohibitive for persons who do not already have relatives residing here. Other countries, such as Canada and Australia, have a point system in which potential immigrants are screened and graded on the basis of their educational attainment, age, occupation, and other characteristics. Thus, through their immigration policies and their offers of economic opportunities, host countries compete for the human and physical capital of the potential migrants.
The home countries of potential immigrants are the last major players in the immigration market. Their economies also provide a certain set of income and employment opportunities to their residents, and their immigration policies regulate the size and skill composition of the out-going flow. In some countries, like the United States, citizens are free to leave the country whenever they wish, for any duration, and for whatever reason. In other countries, immigration statutes impose large costs and penalties on potential immigrants and make it very difficult for residents to migrate elsewhere. Moreover, such restrictions often control not only the size but also the composition of the immigration flow. For example, the Soviet Union long prevented the exit of any person who worked in sensitive government jobs, and Cuba prohibited the exit of persons in the age group subject to military service.
According to the article «Immigration and the economy» by By George J. Borjas (the journal «THE SENIOR ECONOMIST»)
J. BORJAS is Professor of Economics at the University of California at San Diego. He is author of «Friends or Strangers» published by Basic Books
