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Jaime de Melo, Migration, Remittances, and the Brain Drain: a Symposium in Memory of Riccardo Faini—an Introduction, The World Bank Economic Review, Volume 21, Issue 2, 2007, Pages 173–176, https://doi.org/10.1093/wber/lhm009
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It seems inevitable that international migration will be one of the major challenges of the twenty-first century. Lower transaction and communication costs have already greatly eased the formation of migrant networks and reduced migration costs, for long a deterrent to migration from developing countries to developed countries. Demographics also keep migratory policies near the top of policy agendas in developed countries, where dependency ratios continue to rise. Migratory pressures will also increase as falling dependency ratios in developing countries contribute to the swelling of their labor forces.
Designing immigration policies in industrial countries will be a challenge, especially in the European Union, where negative attitudes toward immigrants from poor, nonEU countries persist.1 Even if survey results suggest a slightly more favorable attitude toward immigrants from countries that have recently joined the European Union, facing up to renewed migratory pressures is likely to remain a challenge.
To see why, suppose that migratory decisions depend on wage differentials between destination and source regions and on amenities in each region, but that citizens also have a home-country bias in their locational preference and that amenities enter the utility function as a normal good. Then, unless citizens in source countries face a severe liquidity constraint that prevents them from covering migration costs, with amenities a normal good in the utility function an all-around wage increase that preserves the wage differential between locations will reduce the propensity to migrate. This is so because increasing income for non–liquidity-constrained citizens will increase their demand for local amenities, thereby reducing the propensity to emigrate. In their study of the migration experience of Southern Europeans, Faini and Venturini (1994) found supportive evidence of an inverted U-shaped relation between migration rates and income. This pattern may repeat itself soon following the recent EU enlargement, leaving the European Union and other destination countries that have integrated with “close” neighbors grappling with how to craft immigration policies for “more distant” countries.
