A Global Analysis of Immigration Barriers’ Effects on Poverty, Wages, and Output

Millions of people worldwide have escaped poverty through emigration. Clemens and Pritchett (2008) find that 40% of Mexicans who have gotten out of poverty did so by leaving Mexico and that the fraction for Haiti is 80%. Destinations, though, often restrict immigration severely. In effect, our world resembles a gated community surrounded by slums (Freeman 2006): many in poor nations would love to move to rich nations with far greater economic opportunities but are locked out. Thus, loosening immigration barriers could greatly decrease poverty. For instance, Clemens et al (2009) find that a Bangladeshi could gain more income from two months’ work in a rich nation than from a lifetime of micro-credit. The authors conclude that a modest immigration increase in rich nations would reduce poverty more than any other known anti-poverty program. In an analysis across many nations, Adams and Page (2005) find that a 10% increase in a nation’s population share of emigrants reduces poverty by 2%. While these are provocative conclusions, such studies take a partial equilibrium approach and thus fail to capture certain key relationships across economic sectors. A few studies, such as Hamilton and Whalley 1984, Moses and Letnes 2004, Klein and Ventura 2007, and Walmsley et al 2009 use global, economy-wide models to analyze how migration affects the world economy. They do not, though, analyze poverty. Bradford 2016 extends the Klein and Ventura framework to analyze migration’s effect on poverty and finds that rich nation migration barriers may increase global poverty by 50% or more. That paper, though, takes a very broad-brushed approach without analyzing rural households in detail. This paper builds on that one by adding disaggregated households, in the style of Taylor and Filipski 2011, to the model. This enables us to analyze with greater clarity how migration policy affects poverty in developing nations.