Time-Bound Labor Access to the United States: A Four-Way Win for the Middle Class, Low-Skill Workers, Border Security, and Migrants

The US economy needs low-skill workers now more than ever, and that requires a legal channel for the large-scale, employment-based entry of low-skill workers. The alternative is what the country has now: a giant black market in unauthorized labor that hinders job creation and harms border security. A legal time-bound labor-access program could benefit the American middle class and low-skill workers, improve US border security, and create opportunities for foreign workers

A Tariff-Growth Paradox? Protection's Impact the World Around 1875-1997

This paper uses a new database to establish two findings covering the first globalization boom before World War I, the second since World War II, and the autarkic interlude in between. First, there is strong evidence supporting a Tariff-Growth Paradox: protection was associated with fast growth before World War II, while it was associated with slow growth thereafter. Second, there is strong evidence supporting regional asymmetry: while the tariff-growth association was powerful and positive in the Core and rich New World before World War II, it was typically weak and negative in the poor Periphery. The paper offers explanations for the Paradox by controlling for a changing world economic environment. It shows how the oft-quoted Sachs-Warner results for 1970-1989 are significantly revised when one controls for trading partners' growth, trading partners' tariffs and the effective distance between them over the longer half-century 1950-1997. Falling partners' tariffs was the most important force accounting for the switch in sign on the tariff-growth connection after 1950. An increase in own tariffs after 1950 hurt growth, but it would not have hurt growth in a world where partners' tariffs were much higher, trading partners' growth much slower, and the world less closely connected by transportation. World environment matters. Leader-country reaction to big world events (like the Great Depression) matter. Followers take notice.

Closed Jaguar, Open Dragon: Comparing Tariffs in Latin America and Asia before World War II

Despite an enormous literature that has analyzed the comparative experiences of Latin America and Asia in post-World War II trade policy, almost no attention has been paid to the comparative experience prior to the wars. Even a cursory look at the best available empirical evidence reveals tremendous contrasts between the two regions. Latin America had the highest tariff barriers on earth before 1914; Asia had the lowest. Protected Latin America's belle ‚poque also boasted some of the most explosive growth performance on earth, while Asia registered some of the worst. What brought the two regions to the opposite ends of the tariff policy spectrum? And why are these quantum differences in economic performance so at odds with postwar conventional wisdom? We begin by describing a novel tariff database we have constructed from largely original sources. We explore the impact of colonial rule and unequal treaties' on Asian tariffs, as well as the impact of geography and political economy on Latin American tariffs. Limits to tariff policy autonomy explain one third of the vast difference between the two regions' tariffs before 1914; differences in the extent and structure of internal markets as well as the world tariff environment explain much of the rest. We conclude with an agenda for the future.

Where did British Foreign Capital Go? Fundamentals, Failures and the Lucas Paradox: 1870-1913

A decade has passed since Robert Lucas asked why capital does not flow from rich to poor countries. Lucas used a contemporary example to illustrate his Paradox, the very modest flow of capital from the United States to India during the second great global capital market boom, after 1970. Had he paid more attention to the first great global capital market boom, after 1870, he might have been less surprised. Very little of British capital exports went to poor, labor-abundant countries. Indeed, about two-thirds of it went to the labor-scarce New World where only a tenth of the world's population lived, and only about a quarter of it went to labor-abundant Asia and Africa where almost two-thirds of the world's population lived. Why? Was it caused by some international market failure, or was it due to some shortfall in underlying economic, demographic or geographic fundamentals that made capital's productivity low in poor countries? This paper constructs a panel data set for 34 countries who as a group got 92 percent of British capital, and uses it to conclude that international capital market failure (including whether the country was on or off the Gold Standard) was not involved. It then ranks the three big fundamentals that mattered schooling, natural resources and demography.

Congressional Testimony: Foreign Workers Benefit Massively from Guest Work Opportunities

Leading development economists find that authorized guest workers typically draw massive economic benefits from their work, relative to their best alternatives. They migrate voluntarily, pass on large benefits to their families and home countries, and almost universally return home when guest work programs are well designed. Expanding opportunities for authorized guest work reduces the exploitation of migrant workers by competing directly with the black market for labor.The Center for Global Development is a non-partisan, independent, and non-profit think tank dedicated to reducing global poverty and inequality through rigorous research. This submission briefly summarizes the latest research by myself and other economists regarding the effects of guest work on guest workers

Counting chickens when they hatch: The short-term effect of aid on growth

Past research on aid and growth is flawed because it typically examines the impact of aggregate aid on growth over a short period, usually four years, while significant portions of aid are unlikely to affect growth in such a brief time. We divide aid into three categories: (1) emergency and humanitarian aid (likely to be negatively correlated with growth); (2) aid that affects growth only over the long term, if at all, such as aid to support democracy, the environment, health, or education (likely to have no relationship to growth over four years); and (3) aid that plausibly could stimulate growth in four years, including budget and balance of payments support, investments in infrastructure, and aid for productive sectors such as agriculture and industry. Our focus is on the third group, which accounts for about 45% of all aid flows. We find a positive, causal relationship between this 'short-impact' aid and economic growth (with diminishing returns) over a four-year period. The impact is large: at least two-to-three times larger than in studies using aggregate aid. Even at a conservatively high discount rate, at the mean a $1 increase in short-impact aid raises output (and income) by$8 in present value in the typical country. From a different perspective, we find that higher-than-average short-impact aid to sub-Saharan Africa raised per capita growth rates there by about one percentage point over the growth that would have been achieved by average aid flows. The results are highly statistically significant and stand up to a demanding array of tests, including various specifications, endogeneity structures, and treatment of influential observations. The basic result does not depend crucially on a recipient's level of income or quality of institutions and policies; we find that short-impact aid causes growth, on average, regardless of these characteristics. However, we find some evidence that the impact on growth is somewhat larger in countries with stronger institutions or longer life expectancies (better health). We also find a significant negative relationship between debt repayments and growth. We make no statement on, and do not attempt to measure, any additional long-run effects of aid; four-year panel regressions are not an appropriate tool to examine those relationships.Foreign aid, development assistance, effectiveness, impact, growth, Burnside and Dollar, institutions, timing, interaction, effect, oda, humanitarian, short-term, short-run, long-term, long-run, disaggregated, disaggregation, disaggregate, budget support, social sector, cross-country, international

The place premium : wage differences for identical workers across the US border

This paper compares the wages of workers inside the United States to the wages of observably identical workers outside the United States-controlling for country of birth, country of education, years of education, work experience, sex, and rural-urban residence. This is made possible by new and uniquely rich microdata on the wages of over two million individual formal-sector wage-earners in 43 countries. The paper then uses five independent methods to correct these estimates for unobserved differences and introduces a selection model to estimate how migrants'wage gains depend on their position in the distribution of unobserved wage determinants. Following all adjustments for selectivity and compensating differentials, the authors estimate that the wages of a Bolivian worker of equal intrinsic productivity, willing to move, would be higher by a factor of 2.7 solely by working in the United States. While this is the median, this ratio is as high as 8.4 (for Nigeria). The paper documents that (1) for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination; (2) these gaps represent one of the largest remaining price distortions in any global market; and (3) these gaps imply that simply allowing labor mobility can reduce a given household's poverty to a much greater degree than most known in situ antipoverty interventions.,Population Policies,Income,Economic Theory&Research,Labor Markets

The Place Premium: Wage Differences for Identical Workers across the US Border

We estimate the “place premium”—the wage gain that accrues to foreign workers who arrive to work in the United States. First, we estimate the predicted, purchasing-power adjusted wages of people inside and outside the United States who are otherwise observably identical—with the same country of birth, country of education, years of education, work experience, sex, and rural or urban residence. We use new and uniquely rich micro-data on the wages and characteristics of over two million individual formal-sector wage-earners in 43 countries (including the US). Second, we examine the extent to which these wage ratios for observably equivalent workers may overstate the gains to a marginal mover because movers may be positively selected on unobservable productivity in their home country. New evidence for nine of the countries, combined with a range of existing evidence, suggests that this overstatement can be significant, but is typically modest in magnitude. Third, we estimate the degree to which policy barriers to labor movement in and of themselves sustain the place premium, by bounding the premia observed under self-selected migration alone. Finally, we show that the policy induced portion of the place premium in wages represents one of the largest remaining price distortions in any global market; is much larger than wage discrimination in spatially integrated markets; and makes labor mobility capable of reducing households’ poverty at the margin by much more than any known in situ intervention.migration, wage discrimination, price distortions, policy barriers, place premium, poverty.

Mobiles and mobility: The Effect of Mobile Phones on Migration in Niger

Labor markets in developing countries are subject to a high degree of frictions. We report the results from a randomized evaluation of an adult education program (Project ABC) in Niger, in which students learned how to use simple mobile phones as part of a literacy and numeracy class. Overall, our preliminary results suggest that access to this technology substantially influenced seasonal migration in Niger, increasing the likelihood of migration by at least one household member by 7 percentage points and the number of households' members engaging in seasonal migration. Evidence suggests that there are some heterogeneous impacts of the program, with a higher probability of a household member migrating in one region. These effects do not appear to be driven by differences in observable characteristics of households or differential effects of drought during the survey period. Rather we posit that they are largely explained by the effectiveness of mobile phones as a search technology: Students in ABC villages used mobile phones in more active ways and communicated more with migrants within Niger. These initial results suggest that simple and cheap information technology can be harnessed to affect labor mobility among rural populations. --

Who Protected and Why? Tariffs the World Around 1870-1938

This paper uses a new database to establish a set of tariff facts that have not been well appreciated: tariff rates in Latin America were far higher than anywhere else in the century before the Great Depression; while lower than Latin America, tariffs were far higher in the European periphery and the Englishspeaking new world than they were in the European core; tariff rates rose everywhere in the periphery up to 1900, and then moderated a bit up to WWI; and the great anti-global leap during the 1930s in Latin American and the European periphery was not new policy territory since these two regions had plenty of previous experience with very high tariffs. These world tariff facts need an explanation, especially since economic historians have pretty much ignored them while devoting so much attention to Europe. As we search for the explanations, we find that modern endogenous tariff theory isn’t quite up to the task. The paper uses this world wide sample of 35 countries as a panel to explore competing hypotheses as to what drove policy in the century before WWII: revenue motivation; optimal tariffs; strategic tariffs; deindustrialization fears; Stolper-Samueson forces; and many more. The world environment mattered. Trading partners mattered. Domestic geography, factor endowments, institutions and politics mattered.