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2. A Case against Taxes and Quotas on High-Skill Emigration
- Author:
- Michael Clemens
- Publication Date:
- 05-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Skilled workers have a rising tendency to emigrate from developing countries, raising fears that their departure harms the poor. To mitigate such harm, researchers have proposed a variety of policies designed to tax or restrict high-skill migration. Those policies have been justified as Pigovian regulations to raise efficiency by internalizing externalities, and as non-Pigovian regulations grounded in equity or ethics. This paper challenges both sets of justifications, arguing that Pigovian regulations on skilled emigration are inefficient and non-Pigovian regulations are inequitable and unethical. It concludes by discussing a different class of policy intervention that, in contrast, has the potential to raise welfare.
- Topic:
- Economics, Human Rights, Human Welfare, Immigration, and Monetary Policy
- Political Geography:
- India
3. The Roots of Global Wage Gaps: Evidence from Randomized Processing of U.S. Visas
- Author:
- Michael Clemens
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This study uses a unique natural experiment to test a simple model of international differences in workers' wages and productivity. Large differences in wages across countries could arise from several sources. These include barriers to trade in outputs, differences in technology, differences in workers, or differences in the other factors of production accessible in different countries. To measure the relative importance of these sources in one setting, this study exploits the randomized processing of U.S. visas for a group of Indian workers who produce software within a single multinational firm. In this setting, international barriers to trade in outputs, barriers to technology transfer, and all observable or unobservable differences between workers are extremely low. The results indicate that location outside of India causes a sixfold increase in the wages of the same worker using the same technology to produce a highly tradable good. Under plausible assumptions about competition in the industry, this suggests that country-of-work by itself is responsible—in this industry—for roughly three-quarters of the gap in productivity between workers in India and workers in the richest countries. These findings have implications for open questions in labor, growth, international, and development economics.
- Topic:
- Economics and Labor Issues
- Political Geography:
- United States and India