The Euro-mediterranean partnership : trade in services as an alternative to migration ?

This paper discusses options to facilitate movement of workers between high-income and developing countries within the framework of trade agreements, focusing on the European Union’s partnership agreements with neighboring countries. Existing frameworks for cooperation offer the possibility of expanding temporary rather than longer-term or permanent movement of workers since extant trade agreements provide scope for negotiating specific market access commitments for services, including those delivered through the cross-border movement of natural persons. Even though the potential for such"embodied"trade in services will not be anywhere near what would be associated with substantial liberalization of migration regimes, furthering the services trade dimension in the European Union’s ¬trade agreements offers significant potential Pareto gains. For the partner countries these gains from temporary movement of service providers are both direct - through greater employment in/revenue from providing services in the European Union - and indirect - by helping to increase and sustain higher growth at home.Population Policies,Labor Markets,Public Sector Corruption&Anticorruption Measures,Labor Policies,Housing&Human Habitats

Geopolitical interests and preferential access to U.S. markets

The United States imports around 25 percent of its merchandise under some form of preferential trade regime. The authors examine both the origins and consequences of U.S. trade preferences in the context of the gravity model of international trade. First, they provide estimates of the impact of preferential trade regimes in terms of access to U.S. markets while controlling for geo-strategic interests that determine the countries that are offered commercial preferences. Second, the authors consider not only country eligibility but also the extent of utilization of these programs. Third, they provide new estimates of the impact of transport and transactions costs beyond distance. In the standard gravity estimation, the authors find that beneficiaries of these preferences, except GSP, export 2-3 times more than the excluded countries, after controlling for country and product characteristics. Nonetheless, the estimated effects of these programs are lower when controlling for utilization ratios and selection biases due to the correlation between geopolitical interests and the standard explanatory variables used in the gravity model of trade, such as countries'geographic distance from the United States.Trade and Regional Integration,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Trade Policy,Environmental Economics&Policies

The perversity of preferences : GSP and developing country trade policies, 1976 - 2000

Industrial countries maintain special tariff preferences, namely the Generalized System of Preferences (GSP), for importsfrom developing countries. Critics have highlighted the underachieving nature of such preferences, but developing countries continue to place the GSP at the heart of their agenda in multilateral negotiations. What effect do such preferences have on a recipient's own trade policies? The authors develop and test a simple theoretical model of a small country's trade policy choice, using a dataset of 154 developing countries from 1976 through 2000. They find that countries removed from the GSP adopt more liberal trade policies than those remaining eligible. The results, corrected for endogeneity and robust to numerous alternative measures of trade policy, suggest that developing countries may be best served by full integration into the reciprocity-based world trade regime rather than continued GSP-style special preferences.Environmental Economics&Policies,Trade Policy,Economic Theory&Research,Rules of Origin,Payment Systems&Infrastructure,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Economic Theory&Research,Trade Policy,Trade and Regional Integration

Trade preferences and differential treatment of developing countries : a selective survey

Nonreciprocal trade preferences and provisions in the GATT/WTO that allow developing countries greater leeway to retain or use protectionist policies are two of the central planks of so-called special and differential treatment (SDT) for developing countries in the multilateral trading system. The authors survey the literature on the rationales, institutional features, and economic effectiveness of SDT. A large literature has emerged on SDT in the past 50 years, by both proponents and opponents. They summarize a number of key contributions on the subject, with a special emphasis on the evaluation of the impact of SDT, especially preferential market access. The issue of SDT has become very topical again, following a period during which it was viewed as an outdated concept for the multilateral trading system. The authors therefore devote attention as well to a number of recent contributions that discuss (1) whetherthere is a continued need for SDT, and (2) how this might be designed from both a development (recipient) objective and from the perspective of the trading system more generally. A major theme of the survey is that most of the issues that are debated today were already being discussed in the 1960s. The authors conclude that those who questioned the value of unilateral preferences have proven to be prescient.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Economic Theory&Research,Trade Policy,Trade and Regional Integration

Loss aversion and trade policy

This paper provides new survey evidence showing that loss aversion and reference dependence are important in shaping people's perception of trade policy. Under the assumption that agents'welfare functions exhibit these behavioral elements, we analyze a model with a welfare-maximizing government and with the lobbying framework of Grossman and Helpman (1994). The policy implications of the augmented models differ in three important ways. One, there is a region of compensating protection, where a decline in the world price leads to an offsetting increase in protection, such that a constant domestic price is maintained. Two, protection following a single negative price shock will be persistent. Three, irrespective of the extent of lobbying, there will be a deviation from free trade that tends to favor loss-making industries. The augmented models are more consistent with the observed structure of protection, and in particular, explain why many trade policy instruments are explicitly designed to maintain prices at a given level.Payment Systems&Infrastructure,Economic Theory&Research,Markets and Market Access,Environmental Economics&Policies,Insurance&Risk Mitigation,Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Insurance&Risk Mitigation,Markets and Market Access

Diasporas

Migration flows are shaped by a complex combination of self-selection and out-selection mechanisms. In this paper, the authors analyze how existing diasporas (the stock of people born in a country and living in another one) affect the size and human-capital structure of current migration flows. The analysis exploits a bilateral data set on international migration by educational attainment from 195 countries to 30 developed countries in 1990 and 2000. Based on simple micro-foundations and controlling for various determinants of migration, the analysis finds that diasporas increase migration flows, lower the average educational level and lead to higher concentration of low-skill migrants. Interestingly, diasporas explain the majority of the variability of migration flows and selection. This suggests that, without changing the generosity of family reunion programs, education-based selection rules are likely to have a moderate impact. The results are highly robust to the econometric techniques, accounting for the large proportion of zeros and endogeneity problems.Population Policies,Voluntary and Involuntary Resettlement,Human Migrations&Resettlements,Anthropology,International Migration

The Labor Market Effects of Immigration and Emigration in OECD Countries

In this paper, we simulate the labor market effects of net immigration and emigration during the 1990's in all OECD countries. To accomplish this, we are the first to employ a comprehensive database of migrant stocks, grouped by education level and country of origin/destination, for the years 1990 and 2000. Due to the much higher international mobility of college graduates, relative to all other individuals, we find that net migration flows are college-intensive, relative to the population of non-migrants. Using the consensus aggregate model of labor demand and supply we simulate the long-run employment and wage effects of immigration and emigration. We use a range of parameter values spanning most of the estimates in the literature. In all cases we find that immigration had a positive effect on the wage of less educated natives. It also increased or left the average native wages unchanged and had a positive or no effect on native employment. To the contrary, emigration had a negative effect on the wage of less educated native workers and it contributed to increase within country inequality in all OECD countries. These results still hold true when we correct for the estimates of undocumented immigrants, for the skill-downgrading of immigrants, when we focus on immigration from non-OECD countries, and when we consider preliminary measures of more recent immigration flows for the period 2000-2007.immigration and emigration, complementarity, schooling externalities, average wage, wage inequality

The wage effects of immigration and emigration

Immigrants in Rome or Paris are more visible to the public eye than the Italian or French engineers in Silicon Valley, especially when it comes to the debate on the effects of immigration on the employment and wages of natives in high-income countries. This paper argues that such public fears, especially in European countries are misplaced; instead, more concern should be directed towards emigration. Using a new dataset on migration flows by education levels for the period 1990-2000, the results show the following: First, immigration had zero to small positive long-run effect on the average wages of natives, ranging from zero in Italy to +1.7 percent in Australia. Second, emigration had a mild to significant negative long-run effect ranging from zero for the US to -0.8 percent in the UK. Third, over the period 1990-2000, immigration generally improved the income distribution of European countries while emigration worsened it by increasing the wage gap between the high and low skilled natives. These patterns hold true using a range of parameters for the simulations, accounting for the estimates of undocumented immigrants, and correcting for the quality of schooling and/or labor-market downgrading of skills. All results go counter to the popular beliefs about migration, but they are due to the higher skill intensity of both emigration and immigration relative to non-migrants.Population Policies,Human Migrations&Resettlements,Voluntary and Involuntary Resettlement,International Migration,Labor Markets

Remittances and the Brain Drain: Skilled Migrants Do Remit Less

It has been argued that the brain drain’s negative impact may be offset by the higher remittance levels skilled migrants send home. This paper examines whether remittances actually increase with migrants’ education level. The determinants of remittances it considers include migration levels or rates, migrants’ education level, and source countries’ income, financial sector development and expected growth rate. The estimation takes potential endogeneity into account, an issue not considered in the few studies on this topic. Our main finding is that remittances decrease with the share of migrants with tertiary education. This provides an additional reason for which source countries would prefer unskilled to skilled labor migration. Moreover, as predicted by our model, remittances increase with source countries’ level and rate of migration, financial sector development and population, and decrease with these countries’ income and expected growth rate.migration, remittances, education level, brain drain

Diaspora effects in international migration : key questions and methodological issues

This paper reviews the existing literature on the impact of migrants networks on the patterns of international migration. It covers the theoretical channels at stake in the global effect of the networks. It identifies the key issues, namely the impact on size, selection and concentration of the migration flows. The paper also reviews the empirical hurdles that the researchers face in assessing the importance of networks. The key issues concern the choice of micro vs a macro approach, the definition of a network, the access to suitable data and the adoption of econometric methods accounting for the main features of those data. Finally, the paper reports a set of estimation outcomes reflecting the main findings of the macro approach.Population Policies,Voluntary and Involuntary Resettlement,Human Migrations&Resettlements,International Migration,Anthropology