CiteWeb id: 20150000021

CiteWeb score: 3372

DOI: 10.1086/258726

The purpose of this discussion is to develop the concepts and tools with which to determine the influence of migration as an equilibrating mechanism in a changing economy. Some of the important costs and returns to migration--both public and private--are identified and to a limited extent methods for estimating them are devised. This treatment places migration in a resource allocation framework because it deals with migration as a means to promoting efficient resource allocation and because migration is an activity which requires resources. Within this framework the goal is to determine the return to investment in migration rather than to relate rates of migration to income differentials. The studies of net migration conducted thus far partially reveal the functioning of the labor market yet they provide little more than the fact that net migration is in the "right" direction. The estimated response magnitude of net migration to gaps in earnings is of little value in gauging the effectiveness of migration as an equilibrator. There are several alternative approaches. 1 simple approach is to compare rates of (gross) migration with changes in earnings over time. Numerous compositional corrections would be required and this approach would still have to answer the difficult question of how much equalization of earnings should be brought about by a given amount of migration. A better alternative at least analytically is to cast the problem strictly as one of resource allocation. To do this migration is treated as an investment increasing the productivity of human resources an investment which has costs and which also renders returns. The private costs can be broken down into money and nonmoney costs. The money costs include out of pocket expenses of movement and the nonmoney costs include foregone earnings and the psychic costs of changing ones environment. For any particular indivdual the money returns to migration will consist of a positive or negative increment to his real earnings streams to be obtained by moving to another place. This increment will arise from a change in nominal earnings a change in costs of employment a change in prices or a combination of these three. It was found that psychic costs of migration can be ignored since they involve no resource cost. Likewise nonmoney returns arising from locational preferences should be ignored to the extent that they represent consumption which has a zero cost of production. In sum migration cannot be viewed in isolation. Complementary investments in the human agent are probably as important or more important than the migration process itself.