Migrant Behavior

Though the idea of human development is a relatively new one, something inextricably connected with it, in fact, is not: Migration. We live in a world shaped by human migration. When people migrate they make a decision to leave their hometown or country to move elsewhere in search for shelter, to study, or to reunite with their families. The decision to migrate carries a multitude of consequences and can be driven by several factors. For those who migrate in search for jobs, conventional economic theory proposes that it’s the prospected result of a predominantly economic trade-off which signals “Go” or “Stay”. However, the classic theory of push-pull migration has been criticized as being rationalist for focusing only on individual choice based on economic rationales (e.g., where the cost of staying at the origin is less than the benefit of migrating). Contemporary scholarship on migration also examines opportunity structures and obstacles in society, gender differences, and the roles of intermediaries (such as agencies and organizations that help migrants) to the household or family as decision-making units. International migration originates in choices made by people located within social contexts that vary across time and space. This implies that individuals who contemplate migration do so under bounded rationality; their decision being influenced not only by the amount and quality of information at their disposal but also the context defined by household and community circumstances, which are in turn affected by beliefs and expectations persistent in a migrant-sending society.

This blog entry asks to what extent concepts from behavioural economics, such as framing effects and heuristics, can be applied to the processes of judgement and decision making of international migrants. Migrants of interest for this analysis are those who move in hope for employment that earns a higher income than in their country of origin and thus increases their economic and overall welfare. On paper opportunities for potential migrants are manifold: They can choose from a wide array of possible destinations, possibly have several options to cope with immigration restrictions at the country of destination (e.g. via legal gateways or more evasive techniques) and are free to return home whenever they choose. The United Nations’ International Convention on Migrant Workers defines the term “migrant worker” as a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a State of which he or she is not a national. This includes people that follow two causes of action: permanent migration and participation in temporary worker migration programs.

Migrant workers profit from the overall gap in income between the industrialized nations of the OECD and the countries of the global south. Studies indicate that the ratio of wages earned by workers in popular immigrant receiving countries (such as the United States) to wages earned by observably identical workers abroad ranges from 15 to 2, the median ratio being roughly 4. Figures like these explain why the desire for people in poor countries to migrate is strong. Yet, while economic incentives are firmly in place, they are often constituted by restrictive immigration policies which regulate migration just as firmly. International movement is most restricted for low-skilled workers from poor countries who would reap the greatest benefits from exploiting the income gap. Still, according to the International Labour Organization, as of 2014, there were an estimated 232 million international migrants in the world (defined as persons outside their country of origin for 12 months or more) and approximately half of them were estimated to be economically active (i.e. being employed or seeking employment). Apart from legal permanent immigrants almost all countries of the OECD have temporary worker migration programs, with seasonal workers usually the largest single category, averaging over 500.000 workers a year over the years from 2006 to 2011. These guest worker schemes are often seasonal and represent one of the few opportunities for low-skilled workers from poor countries to benefit from higher incomes to be earned abroad. Moreover, in light of immigration policy being a controversial topic, governments of migrant receiving countries have a much easier time allowing temporary migration than loosening restrictions to permanent migration. This is especially the case when seasonal worker programs are seen as part of an explicit international development policy that can be combined with the goal of meeting the needs of domestic labour markets. Yet, regardless of whether one pursues employment abroad for a limited time only or desires to settle permanently, working migrants and their decisions play a significant role in economic development both in micro-social settings on the household level and on a macro-economic scale.

This role of economic agency forces emigrants to consider the following investment: considerable gains in income over the (potentially lifelong) period spent abroad need to be weighed against costs which have to be incurred upfront. These costs can include visa fees, travel expenses, payments to recruitment agencies, and in some cases a range of illegal payments such as bribes and other fees demanded by different actors involved in facilitating the migration process. If this economic trade-off were the only dimension of deliberation that guided migrants around the world, prediction of international flows of migrant workers would be relatively straightforward (albeit with legal barriers to migration in mind). For this to be true the classical assumptions of rational choice theory would have to be in play, namely: unbounded rationality, unbounded volition and unbounded self-interest. This would imply that at the individual level agents choose the action (or outcome) they most prefer and in the case where action (or outcome) can be evaluated in terms of costs and benefits, a rational individual chooses the action (or outcome) that provides the maximum net benefit.

Projected onto the scenario of migration, do you thing migration decisions are made along those lines? Was Michael Piore right when he wrote about migrant workers in 1979: “the migrant is initially a true economic man, probably the closest thing in real life to the homo enconomicus of economic theory”?

SOURCES

OECD (2013) International Migration Outlook 2013, Paris: OECD.

Ruhs, Martin (2015), The price of rights: regulating international labor migration, Princeton: Princeton University Press.

Massey et al. (2008), “Structural Economic Change and International Migration from Mexico and Poland”, Kolner Z Soz Sozpsychol 60:48, 134-161.

Clemens, Michael (2010), The Roots of Global Wage Gaps: Evidence from Randomised Processing of U.S. Visas. CGD, Working Paper 212, Center for Global Development: Washington D.C.

Clemens, Michael (2014), “Does development reduce migration?”, Robert E. B. Lucas ed., International Handbook on Migration and Economic Development, London: Edward Elgar Publishing Limited.

Graphic: http://www.economist.com/news/asia/21700460-migrant-labour-brings-enormous-economic-benefits-and-wrenching-heartache-foreign-lives