Is migration under-hyped ?

Migration is important. But there are caveats. Free immigration is beneficial so long as there is a free emigration: otherwise you have confrontation between the meritocratic migrants and disfranchised locals. Migration is also beneficial so long as it’s unregulated (Voting by feet concept of Milton Friedman): otherwise it’s unsustainable after a point. Migration is beneficial so long as pull-migration dominates over push migration. A healthy migration pattern is least dependent on geographical constraints - something possible with cheap, accessible and fast logistics tech of the future. In an ideal case, families should also be allowed to migrate (chain migration) for holistic support of the individual and gender-parity in migrant cohorts.

UN Secretary-General António Guterres puts it, “Migration is an expression of human aspiration for safety, dignity and a better future.” That’s push migration. But the real economic benefits are explained by pull factors such as better opportunities in the destination country, The destination also benefits as follows.

Benefits of migration

Migrants help improve several demographic parameters of a region. It improves the Labour Force Participation Rate, including greater gender-parity in the workforce. Migration exploits labor arbitrage. This leads to wage-cost deflation and increased disposable income for the median households which boosts consumption-led economic growth.

Since most migration is work-driven, most migrants are in the working-age group. This raises tax revenue of the country. This is most pronounced in case of high-skilled migrants, which also boosts Knowledge Economy and Total Factor Productivity of the nation. It leads to innovation as well as the growth of hyper-specialized sectors. For example, Dubai where nearly 90% of the population is foreign-born, Luxury Concierge services for UHNIs and Cultural Fusion sectors (eg. Halal-Caribbean cuisine) are thriving. As for the local populace, it pricks them to upskill to higher roles leading to sectoral differentiation driven by cognitive capitalism.

The country providing migrants also benefits from this Ricardian comparative advantage. Countries like Phillipines and Bangladesh accrue nearly 10% of their GDP due to inward remittances from migrant workers.

Moreover for countries witnessing the twin threat of declining fertility rate and aging population, the Migration Dividend might partly compensate for a low Demographic Dividend. Take for example countries passing through such a second demographic transition like Japan, South Korea or Germany, whose TFR have chronically dropped much below the replacement level of 2.1. Can they be smart enough to utilize migrants the way US has done in the Bay area? Only time will tell.

The case of India

Now let’s talk a little about large developing countries like China or India. In India, census data reveals that internal migration as a percentage of population increased from 30% in 2001 to 37% in 2011. Among these, 23% out of the 37% occur within the same district. This means that (100-37) + (23) = 86% of Indians never leave their district of birth. India experiences this localized, cyclic, remittance-based internal migration wave of rural workers going to urban clusters, which Chinmay Tumbe vividly describes in his book. But I’m not going to delve into the many reasons behind it in this article.

Migration in the AI Anthropocene

AI and remote work have changed the migration debate significantly. With AI and robots on the move to replace humans in job markets, we have a simultaneous increased demand for high-skilled migrants and reduced demand for low-skilled ones. This is the labor paradox we’re staring at. Work From Home (WFH) has made virtual migration more lucrative than physical migration for many workers. Employers also prefer it as it saves them from Visa and other structural hassles. With cryptocurrencies and de-dollarisation coming strong, more even exchange rates would be seen between the Global North and South in the future. Would that end the epoch of wage arbitrage and the attraction to settle in the west. Who knows?

The last thing someone would want is the emergence of xenophobia and race-hate. S.P. Huntington had predicted a clash of civilizations. Diversity and cosmopolitanism is great when it’s driven by meritocracy and the free-market and the caveats I talked about at the start of this article, not by man-made interventions. Otherwise the neo-have-nots will keep under-hyping the ontological import of fair migration.

• Raman Butta