International migration has historically been an ever-present phenomenon, but the increasingly global character of migration has brought it to the fore as a specific field of study. Economists have tried to understand it through different frameworks, and have become so embroiled in the differences of understanding it that no clear, coherent, and comprehensive theory of migration has been put forth. To answer the question “how well does economic theory explain international migration,” the answer, unfortunately is “not very well.” This is not due to a dirge of research in the field, but due to conflicting theories that refuse to come together as one coherent framework. This paper will first address the conflicting dimensions that characterize this conflict among theories. It will then delineate those conflicting theories, with an eye on how and where they diverge. This paper will conclude with an analysis of why a synthesis of existing theories is so necessary.
There are four sources of dissension that fragment migration studies are time frame, locus of action, level of analysis, and cause versus effect (Massey 17). These have fragmented existing economic thought on the subject, rendering it virtually powerless in its applicability to policy.
The first dimension of the conflict concerns time, specifically, whether migration can be studied in general absolute frameworks with wide applicability, or if they must be rendered relative to the historical and socio-economic conditions surrounding each separate instance of migration. Certain scholars have preferred the former view, and have constructed general models that only hold under weak assumptions. Other economists have rejected this synchronic view of migration studies. They argue that migration is at base a historical process – and constructing a temporal sequence of social and economic events that precipitate the migration is key to any theoretical understanding of the issue (Massey 3).
The second dimension concerns the ultimate locus of migratory action. This second dimension of the conflict primarily relates to the lens with which one studies migration. Is migration essentially a societal phenomenon? Or else, should one study migration as being a result of individual rational choice decisions? Although many theorists have constructed individual decision models, this approach has been criticized as being too atomistic. These critics argue that migration is structural in nature, caused by social and economic transformations that have led to geographic inequalities in wealth and opportunity (Massey 4).
The third dimension concerns the level of analysis. When analyzing migration patterns, what should be studied? One group of theorists have focused on the individual decision-maker, yet this view has increasingly come under fire from anthropologists, sociologists, and even economists for being too narrow. The unit of analysis preferred by these critics is the family, i.e. the household. Moreover, migration should be studied as one strategy among many for sustenance and economic improvement(Massey 9).
The fourth dimension of the conflict questions the cause and effect of migration. Early on in the debate, scholars diverged on the issue, with some finding that job creation caused migration, while others thought migration led to employment opportunities. These views were later reconciled when the relationship between migration and employment was found to be non-recursive, i.e. they caused each other. However, the bulk of research still concentrates on the determinants as opposed to the consequences of migration (Massey 4).
The individual cost-benefit model has been the most widely used and therefore the most influential framework with which to study migration. Also known as the neoclassical economic theory, the individual cost-benefit model considers migration to be the outcome of rational individual decision-making when the existing wage differential between two countries is substantially large (Massey et al., 1993, 433). This is essentially a micro-level model, yet its conclusions resonate both on the macro-and micro-level. Additional variables that are important are migration costs and the probability of gaining employment. Therefore, the individual will choose to migrate if the expected net return is significantly greater than that from his existing employment plus migration costs (Massey et al., 1993, 434). High levels of individual capital, i.e. education, language skills, connections in destination countries, increase the net gain to be achieved and thus the probability to migrate as well.
Migratory flows tend to originate in countries with low equilibrium wages and direct themselves toward countries with high equilibrium wages. The former tend to have a large supply of labor whereas the latter have a low supply of labor. With low wages and large supplies of labor, individuals in these developing countries usually favor migration to exit both their low wage status as well as their tenuous employment situation, caused by a large unemployed labor force hungry for jobs (Massey et al., 1993, 433). Migration leads to downward pressure on the wage-labor differential in receiving countries, and upward pressure in the sending countries. Equilibrium is reached when the costs of migration and the possibility of not finding a job after migrating outdistance the expected net gains from migration.[1]
A major critique of the neoclassical model is that it exists in a vacuum. It is very difficult to boil down immigration into the rational choice of each individual separately, for individuals do not exist separately in society. They live together, in households and communities. Moreover, the individual in Chile will not have the same incentive structure as the potential migrant in Bangladesh. Cultural, traditional, and historical differences abound between these two examples, and this too affects the decision along with wage differentials.
The new economics of migration school of thought moves away from the focus on the individual, and traces migration to be the choice of a household attempting to maximize income and minimize risk by diversifying household resources (Massey et al., 1993, 436). The new economics approach therefore concentrates on the ability to minimize risk, not maximize income as in the neoclassical model. Moreover, the income that is gained is taken in a cultural and social context, i.e. what may be high income for one family in one place may be perceived as low for a different family in a different place. Therefore, perception of income may be as important in certain cases as the real wage itself. It follows then that low-income families have a higher propensity to send family members abroad then those families who have already achieved a certain level of affluence.
The new economics approach is fundamentally different from the neoclassical model in consideration of the market as well. The neoclassical model assumes perfectly functioning markets, which set wage differences transparently to all, and therefore reduce the rational decision of the individual to a measuring of simple variables. The new economics approach assumes market failure to be a primary reason for migration – if the market is functioning well, then why the desire to migrate when the local market itself is providing opportunities (Massey et al., 1993, 439)? This, too, is thus a micro-level theory. The new economics approach is evidently more pragmatic than the neoclassical model, but with these many constraints upon it, its applicability across a wide range of examples is limited.
Similarly, the Harris and Todaro model suggests adversity to risk as the prime mover behind migration. Families tend to be risk averse, therefore they spread out geographically and across economic strata to diversify their income and thereby decrease the risk of economic fallout. Furthermore, the Harris and Todaro model emphasizes migration as a corrector of disequilibria in the urban market, for migratory labor is generally attracted to cities for higher wages and employment opportunities (Ghatak et al. 160). The conclusion drawn from the Harris and Todaro model is that wage differentials cannot be the sole explanatory variable for migration, a measure of risk adversity must also be present.
The Dual Labor Market Theory contends that the need for migration flows from receiving countries, not sending countries. Labor is demand based, and therefore the labor needs of developed nations set the level of migration. There are four explanatory variables to this theory: structural inflation, motivational problems, economic dualism, and the demography of labor supply (Massey et al., 1993, 441-3). Evidently a macro-level theory, this school of thought assumes two markets - a relatively stable high-income market and a coexisting sub-economy with low incomes, low job security, and often dangerous working conditions. Migrant labor, although affecting both of these markets, is essentially a defining characteristic of the latter.
Wages are considered derivative of societal status as well as of the interplay between labor supply and labor demand. Thus, significant wage increases coexist with disruptions in the social structure, and therefore wages rise only in a progressive fashion. Wages in the secondary economy are relative to the level of the work force willing to work in such conditions. Since the secondary economy has low returns for social capital, i.e. education, skill, and past work experience, native workers balk at working in these menial jobs. Immigrants fill this void, yet the higher the level of immigration the lower relative wages will be. Thus, wages are caught in a vicious cycle of immigration and labor needs. Little immigration will raise wages but also the need for labor, which in turn will lead to increased immigration and lower wages (Massey et al., 1993, 433).
The Dual Labor Market Theory is victim to its own assumptions. The division of the market into two sectors does not always hold, and it is difficult to empirically prove that immigration is demand-driven.
The World Systems theory is essentially a study of the shift of populations in developing countries from a stationary state to becoming migratory. Historically, the core capitalist/imperialist states brought modernity in a half-baked fashion to the peripheral nations of Asia, Africa, and Latin America. This disrupted the pre-modern social and economic system, and resulted in a migratory body of workers shifting from industry to industry, and eventually from country to country, in search of steady employment. This vary macro- approach virtually ignores wage differentials and labor demands; migration patterns are seen as historical necessities and therefore not dependent upon structural market differences.
The creation of global cities was elemental in shaping migratory needs. There were both opportunities for highly educated migrants to work in these cities, and opportunities for menial labor to support these ever-expanding cities. Migratory populations essentially flow in opposite directions than capital and goods, and tend to flow more between former colonies and their respective colonial powers, due to historic linkages. The World Systems theory is essentially a historical perspective of migration within the framework of globalization, and thus is of little value to policy-oriented positive economics.
Cumulative causation, combined with network theory, institutional theory, and migration systems theory, tries to explain the self-perpetuating character on international migration.
In cumulative causation, dubbed as such by Gunnar Myrdal, migration is measured across time and space (Massey 4). Migrant networks, previously not addressed, both facilitate migration in sending countries and help change attitudes toward migration in receiving countries. Essentially, each act of migration is considered separately as each has a separate social context, but they do have certain common variables. Moreover, each act of migration makes it easier for other migrations to occur, as it alters the social context toward more flexibility. Cumulative causation specifically refers to the self-reinforcing cycle that perpetuates and increases migration (Massey et al., 1993, 448).
Migrant networks are defined as social ties that bind former and future migrants. The more developed these networks, the higher the propensity toward migration. These self-reinforcing cycles both reduce costs and risks in migration, and increase the net benefits gained from it. Cumulative causation attempts to synthesize the existing theories by applying them across both time and space, and adding explanatory variables like migrant networks and institutions (Massey et al., 1993, 448-63).
Each of the afore-mentioned economic theories only partially explains international migration. A case study of Mexican villages has concluded similarly, that a broader understanding of migration is necessary, that wage differentials and employment opportunities alone can not explain international migration (Massey et al., 1994, 699-701).
Migration occurs on the levels of individuals, households, communities, and nation-states. It is both micro- and macro- in nature. The issue is multi-dimensional, and needs to be treated as such. If coherent policy proposals are to be drawn from these theories, than these theories need to be synthesized into one comprehensive framework. Until then, economics has but a sub-par explanation of international migration.
Douglas S. Massey, Juaquin Arango, Graeme Hugo, Ali Kouaouci, Adfela Pellegrino, J. Edward Taylor, "Theories of International Migration: A Review and Appraisal", Population and Development Review, Vol. 19, No. 3, September 1993, pp. 431-466.
Douglas S. Massey, "Social Structure, Household Strategies and the Cumulative Causation of Migration", Population Index, Spring 1990, Vol. 56, No. 1, pp. 3-26.
Douglas S. Massey, Juaquin Arango, Graeme Hugo, Ali Kouaouci, Adela Pellegrino, J. Edward Taylor, "An Evaluation of International Migration Theory: The North American Case", Population and Development Review, Vol. 20, No. 4, December 1994, pp. 699-751.
Subrata Ghatak , Paul Levine and Stephen Price, "Migration Theories and Evidence: An Assessment", Journal of Economic Surveys, Vol. 10, No. 2, 1996, pp. 159-198.